As filed with the Securities and Exchange Commission on October 28, 1999.
Commission File No. 0-20598.
Securities and Exchange Commission
Washington, D.C. 20549
_______________________
FORM S-8
Registration Statement Under The Securities Act of 1933
________________________
DEFINITION, LTD.
---------------
(Exact name of Registrant as specified in its charter)
NEVADA 75-2293489
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4625 W. Nevso Drive, Suite 2, Las Vegas,NV 89103, (702) 257-2367
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(Address including zip code, and telephone number, including area code,
of registrant's principal executive offices)
1999 KEY EMPLOYEE/DIRECTOR STOCK OPTION PLAN
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(Full title of the plan)
Charles Kiefner
Chairman
Definition, Ltd.
4625 West Nevaso Drive, Suite 2
Las Vegas, Nevada 89103
(702) 257-2367
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(Name and address, including zip code, and telephone number, including area
code, of agents for service)
Copy to:
CHARLES A. CLEVELAND, P.S.
Charles A. Cleveland, Esquire
1212 North Washington, Suite 304
Spokane, Washington 99201-2401
(509) 326-1029
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement has become effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following line: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Calculation Of Registration Fee
Proposed Proposed
maximum maximum
offering aggregate
Title of Securities Amount to be price offering Amount of
to be registered registered share[1] price[1] registration fee
- ---------------- ------------ -------- -------- ----------------
Common Stock,
$0.001 par value 1,000,000 shares $0.55 $550,000 $152.90 [2]
[1] [3]
- -----------------------------------------------------------------------------
[1] The maximum offering price was calculated pursuant to Rule 457(c), based
upon the closing bid price for the Common Stock on October 26, 1999.
[2] Minimum fee.
[3] Represents shares issuable upon the exercise of options granted under the
employee stock option plan. Pursuant to Rule 416(a), also covers additional
securities that may be offered as a result of stock splits, stock dividends
or similar transactions relating to these shares.
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INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this registration
statement: (i) the latest annual report of Definition, Ltd. (the
"Registrant") filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); (ii) all other reports
filed by the Registrant pursuant to Sections 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year covered by the annual report referred to
in clause (i) above; (iii) all documents the Company has filed pursuant to
Sections 13(a), 13(c), 14or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the date hereof and prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered hereby have been sold or which
deregisters all securities remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
dates of filing of such documents. . All documents filed by the Registrant
after the date of this registration statement pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment (that indicates all securities offered have been
sold or deregisters all securities then remaining unsold), 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
The Company is authorized to issue up to 50,000,000 shares of Common Stock,
$0.001 par value per share. The holders of Company Common Stock will be
entitled to one vote per share on each matter submitted to a vote at any
meeting of shareholders. Shares of Common Stock do not carry cumulative
voting rights and, therefore, a majority of the shares of outstanding Common
Stock will be able to elect the entire Board of Directors of the Company and,
if they do so, minority shareholders would not be able to elect any persons
to the Board of Directors. The Company's bylaws provide that a majority in
number of the issued and outstanding shares of the Company shall constitute
a quorum for shareholders' meetings, except with respect to certain matters
for which a greater percentage quorum is required by statute or the bylaws.
Shareholders of the Company will have no preemptive rights to acquire additional
shares of Common Stock or other securities. The Common Stock will not be
subject to redemption and will carry no subscription or conversation rights.
In the event of liquidation of the Company, the shares of Common Stock will
be entitles to share equally in corporate assets after satisfaction of all
liabilities. The shares of Common Stock, when issued, will be fully paid and
nonassessable.
Holders of Common Stock are entitled to receive such dividends as the Board of
Directors may from time to time declare out of funds legally available for
the payment of dividends. The Company intends to expand its business through
reinvestment of profits, if any, and does not anticipate that it will pay
dividends in the foreseeable future.
The Board of Directors has the authority to issue the authorized but unissued
shares without action by the shareholders.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Charles A. Cleveland, P.S., Spokane, Washington will pass upon the validity of
the issuance of the shares of common stock offered hereby and certain other
legal matters. Charles A. Cleveland, the sole shareholder of the law firm,
beneficially owns 100,000 shares of common stock. The 100,000 shares of
Common Stock constitute a significant interest, as that term is defined under
Item 509 of Regulation S-K.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada Revised Statutes 78.037 is incorporated herein by this reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934 or the Rules and
Regulations of the Securities and Exchange Commission thereunder may be
permitted under said indemnification provisions of the law, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, any such indemnification is against public policy and is,
therefore, unenforceable.
ARTICLES AND BYLAWS. The Company's Articles of Incorporation and the Company's
Bylaws provide that the Company shall, to the fullest extent permitted by
law, indemnify all directors of the Company, as well as any officers or
employees of the Company to whom the Company has agreed to grant
indemnification.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
ITEM 8. EXHIBITS
The following are filed as exhibits to this Registration Statement:
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- ------------
4.1 1999 KEY EMPLOYEE/DIRECTOR STOCK OPTION PLAN 5
4.2 Amended and Restated Articles of Incorporation,
dated January 13, 1995, of the Company.
Incorporated by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998. na
4.3 By-laws of the Company, dated January 13, 1995.
Incorporated by reference to the Company's Annual
Report on Form 10-K, for the fiscal year ended
December 31, 1998. na
5.1 Opinion of Charles A. Cleveland, re: Legality 13
24.1 Consent of Clancy and Co., P.L.L.C., Certified 4
Public Accountants
24.2 Consent of Charles A. Cleveland, Attorney At Law, 13
is included in Exhibit 5.1 to this Registration
Statement.
25.1 Powers of Attorney (contained on Sequential
page 4 of this Registration Statement) 4
2
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ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that Paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to the included in a
post-effective amendment by those Paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the 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) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in 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.
(c) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
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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 of 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 Las Vegas, State of Nevada, on the 28th day of
October, 1999.
DEFINITION, LTD.
By: ______________
/s/ Donna Anderson
Title: President, Chief Executive Officer,
By: _______________
/s/ Charles Kiefner
Title: Chairman, Secretary
Date: October 28, 1999
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Donna Anderson, as his/her true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, therewith, with the Securities and Exchange
Commission, and to make any and all state securities law or Blue Sky filings,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite or necessary to be done
in about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying the confirming all that said
attorney-in-fact and agent, or any substitute or substitutes, may lawfully 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
- --------- ----- ----
______________ President and Director October 28, 1999.
Donna Anderson
_______________ Chairman, Secretary and October 28, 1999.
Charles Kiefner Director
________________ Director October 28, 1999.
Steven Gallagher
________________ Director October 28, 1999.
Frankie Randall
Exhibit 24.1 CONSENT OF INDEPENDENT AUDITORS'
We consent to the incorporation by reference in this Form S-8 of our report
dated August 9, 1999, in the Annual Report on Form 10-KSB of Definition,
Ltd., for the year ended December 31, 1998. We also consent to the reference
to our firm under the heading "Experts" in this Registration Statement.
-----------------------
/s/ Clancy and Co., P.L.L.C.
October 28, 1999
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Exhibit 4.1
DEFINITION LTD.
1999 KEY EMPLOYEE/DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to promote the interests of the
Company and its stockholders by attracting, retaining, and stimulating the
performance of selected employees and directors, and giving such employees
and directors the opportunity to acquire a proprietary interest in the
Company's business and an increased personal interest in this continued
success and progress as well as increasing the productivity of those
individuals whom the Committee deem to have the potential to contribute
to the success of the Company.
2. Definitions. Unless otherwise indicated, the following words when used
herein shall have the following meanings:
a. "Board of Directors" shall mean the Board of Directors of the Company.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
c. "Common Stock" shall mean the Company's Common Stock ($0.001 par value)
and any share or shares of the Company's stock hereafter issued or
issued in substitution for such shares.
d. "Company" means Definition Ltd., a Nevada corporation and shall include any
entity that is directly or indirectly controlled by the Company or any
entity, including an acquired entity, in which the Company has a
significant equity interest, as determined by the Committee.
e. "Committee" means the body appointed by the Board of Directors, which shall
be comprised in such a manner as to comply with the requirements, if
any, of Rule 16b-3 (or any successor rule) under the Exchange Act and of
Section 162 of the Code.
f. "Director" shall mean a member of the Board of Directors.
g. "Key Employee" shall mean any person(s), who is/are employed by the
Company and who act in the capacity of President, Chief Executive
Officer, Chief Financial Officer and/or Principal Financial Officer, as
well as all Directors.
h. "Incentive Stock Option" shall mean any option granted to an eligible key
employee under the Plan, which the Company intends at the time the option
is granted to be an Incentive Stock Option within the meaning of Section
422 of the Code.
i. "Nonqualified Stock Option" shall mean any option granted to an eligible key
employee under the Plan which is not an Incentive Stock Option.
j. "Option" shall mean and refer collectively to Incentive Stock Options and
Nonqualified Stock Options.
k. "Optionee" shall mean any key employee who is granted an Option under the
Plan. "Optionee" shall also mean the personal representative of an
Optionee and any other person who acquires the right to exercise an
Option by bequest or inheritance or purusant to a QDRO.
l. "Stock Appreciation Right" shall mean a right to surrender to the Company all
or a portion of an Option, to the extent the Option is then exercisable,
and to receive in exchange a payment as provided in Section 6.
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m. "Subsidiary" shall mean a subsidiary corporation of the Company as defined in
Section 425(f) of the Code.
3. Administration.
a. This Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"). Except for the terms and conditions
explicitly set forth in this Plan, the Committee shall have the authority,
in its discretion, to determine all matters relating to the options to be
granted under this Plan, including selection of the individuals to be
granted options, the number of shares to be subject to each grant, the
date of grant, the termination of the options, the option term, vesting
schedules, and all other terms and conditions thereof. Such authority
shall also include the authority in the event of a spin-off or other
corporate transaction to permit substitution of an Award granted under the
Plan with an award from another company or an award denominated in other
than shares of Common Stock. Grants under this Plan to Key Employees need
not be identical in any respect, even when made simultaneously. The
Committee will also determine and approve the granting of Stock
Appreciation Rights to selected eligible individuals and determine whether
the grant of options will consist of an Incentive Stock Option as
described in Section 422 of the Internal Revenue Code of 1986, as amended
(hereinafter referred to as the "Code"), or a Non-Qualified Stock Option,
which shall consist of any option granted under this Plan other than an
Incentive Stock Option.
b. Options and Stock Appreciation Rights shall be evidenced by written
agreements ("Award Agreements") which shall contain such terms and
conditions as may be determined by the Committee. Each agreement shall be
signed on behalf of the Company by an officer or officers delegated such
authority by the Committee using either manual or facsimile signature.
c. All decisions made by the Committee pursuant to the provisions of this Plan
and all determinations and selections made by the Committee pursuant to
such provisions and related orders or resolutions of the Board of
Directors shall be final and conclusive. The Committee shall not have the
right to cancel outstanding stock options or stock appreciation rights for
the purpose of replacing or regranting such options or rights with a
purchase price that is less than the purchase price of the original option
or right.
d. Limitation of Liability. No member of the Committee shall be liable for any
action, failure to act, determination or interpretation made in good faith
with respect to this Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, gross
negligence or reckless disregard of his or her duties. The Company shall
indemnify each member of the Committee for all costs and expenses and, to
the extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiation for the
settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
e. All or part of any Award shall be subject to conditions and restrictions
established by the Committee and set forth in the Award Agreement, which
may include, but not be limited to, achievement of Goals over a specified
Period, such as earnings or earnings growth; return on equity, assets or
investment; revenues; expense control; total shareholder return; cash
flow; or assets. The Committee may select one criterion or multiple
criteria for measuring performance, and the measurement may be based on
total Company or business unit performance or based on comparative
performance with other companies.
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f. The Committee also may require or permit participants to elect to defer the
delivery of stock options or the settlement of Awards in cash under such
rules and procedures as it may establish under the Plan. It also may
provide that deferred settlements include the payment or crediting of
interest on the deferral amounts, or the payment or crediting of dividend
equivalents where the deferral amounts are denominated in share
equivalents. In addition, the Committee may stipulate in an Award
Agreement, either at the time of grant or by subsequent amendment, that a
payment or portion of a payment of an Award be delayed in the event that
Section 162(m) of the Code (or any successor or similar provision of the
Code affecting tax deductibility) would operate to disallow a tax
deduction by the Company for all or a portion of such payment. The period
of any such delay in payment shall be until the payment or portion
thereof, is tax deductible, or such earlier date as the Committee shall
determine.
4. Eligibility and Participation. The group of employees eligible to receive
options and Stock Appreciation Rights shall consist only of those
employees who act in the capacity of President, Chief Executive Officer,
Chief Financial Officer and/or Principal Financial Officer, and Director.
5. Shares Subject to This Plan.
a. The stock to be offered under the Plan shall be shares of the Company's
authorized Common Stock and may be unissued shares or shares now held or
subsequently acquired by the Company as treasury shares, as the Board of
Directors may from time to time determine. Subject to adjustment as
provided in Section 14 hereof, the aggregate number of shares to be
delivered under this Plan shall not exceed one million (1,000,000) shares.
If an option expires, is surrendered in exchange for another option, or
terminates for any reason during the term of this Plan prior to its
exercise in full, the shares subject to but not delivered under such
option shall be available for options thereafter granted and for
replacement options which may be granted in exchange for such surrendered
or terminated options. The shares under a related option which are
surrendered upon the exercise of a Stock Appreciation Right shall be
charged against the aggregate number of shares available which may be
delivered under the Plan.
b. Any shares of common stock delivered upon exercise of a Stock Appreciation
Right may be unissued shares or treasury shares, as the Board of Directors
may from time to time determine, and shall be charged against the
aggregate number of shares of stock available for purposes of this Plan.
6. Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights
to key employees who have been or are granted options under this Plan. In
exchange for the surrender in whole or in part of the privilege of
exercising the related option to purchase shares of the Company's common
stock, the granted Stock Appreciation Right shall entitle a key employee
to payment of an amount equal to the appreciation in value of the
surrendered options (the excess of the fair market value of such options at
the time of surrender over their aggregate option price). Such payment may
be made in cash, check, or in shares of common stock valued at the fair
market value as of the date of the surrender, or partly in cash (or check)
and partly in shares of common stock, as determined by the Committee in
its sole discretion. The Committee may establish a maximum appreciation
value which would be payable under granted rights.
The Board may establish an arrangement, to be administered by the Committee,
under which key employees may defer such payment to a future date or dates
(including the accrual of interest on deferred amounts), provided that a
key employee's deferral election under any such arrangement shall be made
(a) on or before the date of grant of the Stock Appreciation Rights being
surrendered, or (b) subject to approval by the Committee, before the date
on which the key employee becomes vested in the Stock Appreciation Rights
being surrendered.
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7. Incentive Stock Options.
a. An option designated by the Committee as an "Incentive Stock Option" is
intended to qualify as an " Incentive Stock Option" within the meaning of
Subsection (b) of Section 422 of the Code.
b. To the extent that the aggregate fair market value (determined at the time
the option is granted) of the stock with respect to which Incentive Stock
Options (determined without regard to this paragraph b.) are exercisable
for the first time by the grantee during any calendar year (under this
Plan and all other Incentive Stock Option Plans of the Company and its
subsidiaries) exceed $100,000, such options shall be treated as
Non-Qualified Options and not qualify as incentive Stock Options.
c. Should Section 422 of the Code, or regulations or pronouncements thereunder,
be modified during the term of this Plan, this Plan and any outstanding
options may be amended to conform to such modification, if approved by the
Board of Directors, upon recommendation by the Committee.
d. For purposes of this Plan, fair market value shall be determined under the
applicable method provided by Regulations under Section 2031 of the Code.
e. In the case of an ISO: (a) granted to a key employee who at the time of the
grant of such ISO owns stock representing more than 10% of the voting
power of all classes of stock of the Company or any Parent or Subsidiary,
the per share exercise price shall be no less than 110% of the fair market
value per Share on the date of grant; (b) granted to any other key
employee, the per share exercise price shall be no less that 100% of the
Fair Market Value per share on the date of grant.
f. In the case of an ISO granted to a key employee who at the time of the grant
of such ISO owns stock representing more than 10% of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, such ISO may
not be exercised after the expiration of five (5) years from the date the
ISO is granted.
g. Disqualifying Disposition. If stock acquired upon exercise of an Incentive
Stock Option is disposed of by an optionee prior to the expiration of
either two years from the date of grant of such option, one year from the
transfer of shares to the optionee pursuant to the exercise of such option
or in any other disqualifying disposition, within the meaning of Section
422 of the code, such optionee shall notify the Corporation in writing of
the date and terms of such disposition. A disqualifying disposition by an
optionee shall not affect the status of any other incentive stock option
granted under the Plan.
8. Term of Option Period. The term during which options and Stock Appreciation
Rights may be granted under this Plan shall expire as set in the discretion
of the Committee, and the option period during which each option and Stock
Appreciation Right may be exercised shall, subject to the provisions of
Section 13 hereof, be such period as determined by the Committee, expiring
not later than the tenth anniversary of the grant date for an Incentive
Stock Option, and no later than the expiration date of the related option
for any Stock Appreciation Right, as may be determined by the Committee.
9. Option Price. Except as set forth in section 7 herein, the price at which
shares may be purchased upon exercise of a particular option shall be such
price, as may be fixed by the Committee.
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10. Stock as Form of Exercise Payment; Cashless Exercise.
a. A key employee who owns shares of Company common stock may use the
previously acquired shares, value to be determined as the fair market
value, as a form of payment to exercise stock options under this Plan.
However, the Committee, in its discretion, may restrict or rescind this
right upon notification to the key employee-participants in this Plan. An
option may be exercised with stock only by delivering whole shares of
Company stock having a fair market value equal to or less than the exercise
price. If an option is exercised by delivery of stock having a fair market
value less then the exercise price, the shortfall must be made up in cash.
b. Payment may also be made by surrendering to the Company a portion of a
particular grant and receiving from the Company in whole shares the
difference between the total shares of the option grant and the number of
whole option shares surrendered. The number of whole option shares
required to be surrendered by an optionee shall be the number of whole
option shares that is equal to or less then the result of dividing the
total exercise price of the options being exercised by the fair market
value of one share of common stock. If the whole number of option shares
surrendered is less than the total exercise price of the grant, the
shortfall must be made up in cash.
c. The delivery of a properly executed notice together with such other
documentation as the Committee and the broker, if applicable, shall
require to effect an exercise of an option and delivery to the Company
of the sale or loan proceeds required to pay the exercise price.
d. Any combination of the foregoing methods.
e. Such other consideration and methods as are permitted by applicable laws.
If the Fair Market Value of the number of whole shares transferred or the
number of whole option shares surrendered is less than the total exercise
price of the option, the shortfall must be made up in cash.
11. Vesting; Exercise of Options and Rights.
a. Vesting; Exercisability. Subject to the provisions of paragraph g.
herein, an option shall vest and become nonforfeitable and exercisable,
immediately.
b. Each option and Stock Appreciation Right granted shall be exercisable in
whole or in part at any time or from time to time during the option
period as the Committee may determine, provided that the election to
exercise an option or Stock Appreciation Right shall be made in
accordance with applicable Federal laws and regulations, and further
provided that each option shall contain a provision that will prevent
exercise of the option unless the optionee remains in the employ of the
Company or its subsidiary at least one year after the granting of the
option. However, the Committee may in its discretion accelerate the
vesting schedule of any option at any time.
c. No option may at any time be exercised with respect to a fractional share.
In the event that shares are issued pursuant to the exercise of a Stock
Appreciation Right, no fractional shares shall be issued; however, a
fractional Stock Appreciation Right may be exercised for cash.
d. As a condition to the exercise of a Non-Qualified Stock Option or Stock
Appreciation Right, grantees shall make such arrangements as the Committee
may require for the satisfaction of any federal, state, or local
withholding tax obligations that my arise in connection with such exercise.
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e. No shares shall be delivered pursuant to the exercise of any option or
Stock Appreciation Right, in whole or in part, until qualified for
delivery under such securities laws and regulations as may be deemed by
the Committee to be applicable thereto and until, in the case of the
exercise of an option, payment in full of the option price thereof or
stock as a form of payment as provided in Section 10 hereof is received
by the Company in cash (or check) or stock. No holder of an option or
Stock Appreciation Right, or his/her legal representative, legatee, or
distributee, shall be or be deemed to be a holder of any shares subject
to such option or Stock Appreciation Right unless and until he/she has
received a certificate or certificates therefor.
f. Notwithstanding any vesting requirements contained in any Option, all
outstanding Options shall become immediately exercisable (1) following
the first purchase of Common Stock pursuant to a tender offer or exchange
offer (other than an offer made by the Company) for all or part of the
Common Stock, (2) at such time as a third person, including a "group" as
defined in Section 13(d) of the Securities Exchange Act of 1934, becomes
the beneficial owner of shares of the Company having 25% or more of the
total number of votes that may be cast for the election of Directors of
the Company, (3) on the date on which the shareholders of the Company
approve (1) any agreement for a merger or consolidation in which the
Company will not survive as an independent, publicly owned corporation or
(ii) any sale, exchange or other disposition of all or substantially all
of the Company's assets. The Committee's reasonable determination as to
whether such an event has occurred shall be final and conclusive.
g. Notwithstanding any other provisions of this Agreement to the contrary, the
right of any Key Employee to receive any benefits hereunder shall terminate
and shall be forever forfeited if such Key Employee's employment with
Definition Ltd. is terminated because of his/her fraud, embezzlement,
dishonesty, or breach of fiduciary duty. In such an event, all
unexercised options shall be deemed null and void. This Section shall be
inapplicable to any such termination of employment or status as an
advisor or consultant occurring after the Plan has been terminated.
12. Transferability of Options and Stock Appreciation Rights. The right of any
optionee to exercise an option or Stock Appreciation Right granted under
the Plan shall, during the lifetime of such optionee, be exercisable only
by such optionee or a gift to a qualified donee or pursuant to a
qualified domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder (a "QDRO") and shall not be
assignable or transferable by such optionee other than by will or the
laws of descent and distribution or a QDRO. A "Qualified Donee" shall
consist of an Employee's or Director's family member who has acquired
the options from an employee or director through a gift or a domestic
relation order. For purposes of this form, "family member" includes any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee's household
(other than a tenant or employee), a trust in which these persons have
more than fifty percent of the beneficial interest, a foundation in which
these persons (or the employee) control to the management of assets, and
any other entity in which these persons (or the employee) own more than
fifty percent of the voting interests. This Plan is not available for
the exercise of options transferred for value. The following
transactions are not prohibited transfers for value: a transfer under a
domestic relations order in settlement of marital property rights; and,
a transfer to an entity in which more than fifty percent of the voting
interests are owned by family members (or the employee) in exchange for
an interest in that entity.
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13. Termination of Relationship. The terms and conditions under which an option
or Stock Appreciation Right may be exercised after the termination of
relationship with the Company shall be determined by the Committee.
14. Changes in Common Stock. The aggregate number and class of shares on which
options and Stock Appreciation Rights may be granted under this Plan, the
number and class of shares covered by each outstanding option, and the
exercise price per share thereof (but not the total price), of each such
option, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock of the Company
resulting from a split-up or consolidation of shares, or any spin-off,
spin-out, split-up, or other distribution of assets to shareholders, or
any like capital adjustment or the payment of any such stock dividend, or
any other increase or decrease in the number of shares of common stock of
the Company without the receipt of consideration by the Company, or
assumption and conversion of outstanding grants due to an acquisition.
15. Amendment and Discontinuance. The Board of Directors may amend, suspend, or
discontinue this Plan, but may not, without the approval of the holders of
the Company's common stock, make any amendment thereof which operates:
(a) to increase the total number of shares which may be granted under
this Plan, (b) to extend the terms of this Plan or the maximum option
period provided in Section 8 hereof, (c) to decrease the minimum option
price provided in Section 9 hereof, (d) to materially modify the
requirements as to eligibility for participation in this Plan, or (e) to
materially increase the benefits accruing to participants under this
Plan. No amendment to this Plan shall, except with the consent of the
Optionee, adversely affect rights under an option previously granted.
16. Term of Plan. This Plan shall become effective October 19, 1999, subject
to the approval by the holders of the Company's common stock at a meeting
to be held within one year of the date of adoption of this Plan.
17. Investment Representation. Upon demand by the Company, the Optionee shall
deliver to the Company a representation in writing that the purchase of
all shares with respect to which notice of exercise of the Option or
Stock Appreciation Right has been given by Optionee is being made for
investment only and not for resale or with a view to distribution and
containing such other representations and provisions with respect thereto
as the Company may require. Upon such demand, delivery of such
representation promptly and prior to the transfer or delivery of any such
shares and prior to the expiration of the option period, shall be a
condition precedent to the right to purchase such shares.
18. Rights as Shareholder and Key Employee. An Optionee shall have no rights as
a shareholder of the Company with respect to any shares of Common Stock
covered by an Option until the date of the issuance of the stock
certificate for such shares. Neither the Plan, nor the granting of an
option or other rights herein, nor any other action taken pursuant to the
Plan shall constitute or be evidence of any agreement or understanding,
express or implied, that a key employee has a right to continue as an
Employee or Director for any period of time or at any particular rate of
compensation.
19. Governing Law. Options granted under this Plan shall be construed and shall
take effect in accordance with the laws of the State of Nevada.
20. Limitations on Sale of Stock Purchased Under the Plan. The Plan is
intended to provide common stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any key
employee or Director in the conduct of his own affairs. A key employee or
Director, therefore, may sell stock purchased under the Plan at any time
he chooses, subject to compliance with any applicable Federal or state
securities laws. THE PARTICIPANT ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.
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21. Governmental Regulation. The Company's obligation to sell and deliver
shares of the Company's common stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance, or sale of such shares.
22. Other Benefit And Compensation Programs. Unless otherwise specifically
determined by the Committee, settlements of Awards received by
Participants under the Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of calculating payments or
benefits from any Company benefit plan or severance program. Further, the
Company may adopt other compensation programs, plans or arrangements as
it deems appropriate or necessary.
23. Unfunded Plan. Unless otherwise determined by the Board, the Plan shall
be unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any Participant or other person.
To the extent any person holds any rights by virtue of an Award granted
under the Plan, such rights shall constitute, general unsecured
liabilities of the Company and shall not confer upon any Participant any
right, title or interest in any assets of the Company.
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Exhibit 5.1
October 26, 1999
Definition, Ltd.
4625 W. Nevso Drive
Suite 2, Las Vegas, NV 89103
Re: Definition, Ltd. -- Form S-8 Registration Statement
Ladies and Gentlemen:
We have acted as counsel for Definition, Ltd., a Nevada corporation (the
"Company"), in connection with the preparation of a Registration Statement
on Form S-8 (the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating
to the registration of an aggregate of 1,000,000 shares (the "Shares") of
the Company's Common Stock, par value $0.001 per share ("Common Stock"),
all of which may to be issued by the Company under the 1999 KEY
EMPLOYEE/DIRECTOR STOCK OPTION PLAN (the "Plan").
I have examined the Registration Statement and such documents and records of
the Company and other documents as I had deemed necessary for purposes of
this opinion. We have not made any independent review or investigation of the
organization, existence, good standing, assets, business or affairs of the
Company, or of any other matters. In rendering our opinion, we have assumed
without inquiry the legal capacity of all natural persons, the genuineness of
all signatures, and the authenticity of all documents submitted to us.
We have not undertaken any independent investigation to determine facts bearing
on this opinion, and no inference as to the best of our knowledge of facts
based on an independent investigation should be drawn from this representation.
For purposes of this letter, I have assumed that the offer and sale of
securities pursuant to the Plan is not in connection with a capital raising
transaction, and does not directly or indirectly promote or maintain a market
for the Registrant's securities.
Based upon the foregoing, I am of the opinion that upon the happening of the
following events, due action by the Board of Directors and Shareholders of
the Company authorizing the Plan and the issuance and of the Shares thereto;
due action by the Board of Directors of the Company authorizing the issuance
and/or sale of the Shares under the Plan;
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Definition, Ltd.
October 27, 1999
Page 2
filing of the Registration Statement and any amendments thereto and the becoming
effective of the Registration Statement; and due execution by the Company and
registration by its registrars of the Shares of the Plan and sale thereof
as contemplated by the Registration Statement and in accordance with the
aforesaid corporate and governmental authorizations, the Shares are duly
authorized for issuance and are validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
This opinion is given as of the date hereof, and we assume no obligation to
advise you after the date hereof of facts or circumstances that come to our
attention or changes in law that occur which could affect the opinions
contained herein.
For purposes of Item 509, of Regulation S-K, I will receive a contingent
interest of 100,000 shares of Common Stock of the Company, for services
performed in connection with the filing of the registration statement on
Form S-8, as well as other legal services on behalf of the Company.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be
relied upon by you for any other purpose or furnished, or quoted to, or
relied upon by any other person, firm or corporation for any purpose without
our prior express written consent. In giving such consent, we do not admit
that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
CHARLES A. CLEVELAND, P.S.
By: ____________________
/s/ Charles A. Cleveland
CAC:lrb
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