<PAGE> 1
As filed with the Securities and Exchange Commission on June 12, 1995
Registration No. 33-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SUN SPORTSWEAR, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Washington 91-1132690
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
</TABLE>
6520 South 190th Street, Kent, Washington 98032
-----------------------------------------------
(Address of principal executive offices)
SUN SPORTSWEAR, INC.
1989 EMPLOYEE STOCK OPTION PLAN
1989 DIRECTOR STOCK OPTION PLAN
-------------------------------
(Full title of the plans)
Larry C. Mounger, President
Sun Sportswear, Inc.
6520 South 190th Street
Kent, Washington 98032
---------------------------------------
(Name and address of agent for service)
(206) 251-3565
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Copy to: James E. Dunlap
Heller, Ehrman, White & McAuliffe
6100 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104-7098
(206) 389-6044
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
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 (2) fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value 520,500 $ 6.00 $ 2,188,750 $ 754.54
=========================================================================================================
</TABLE>
(1) Based on highest exercise price of outstanding options for shares of
Registrant's Common Stock.
(2) As to shares of Registrant's Common Stock underlying unissued options,
estimated (solely for the purpose of calculating the registration fee)
on the basis of the average high and low price of the Registrant's
Common Stock on the NASDAQ National Market on June 6, 1995 (as
reported in the Wall Street Journal on June 7, 1995).
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed or to be filed with the Commission by the
registrant are incorporated by reference in this registration statement:
(a) The registrant's latest annual report (Form 10-K) filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or the latest prospectus filed pursuant to Rule
424(b) under the Securities Act of 1933, as amended (the "Securities Act"),
which contains, either directly or by incorporation by reference, certified
financial statements for the registrant's latest fiscal year for which such
statements have been filed;
(b) All other reports filed by the registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by
the annual report or prospectus referred to in (a) above;
(c) The description of the Common Stock of the registrant
contained in the registration statement filed under the Exchange Act
registering such Common Shares under Section 12 of the Exchange Act (File No.
0-18054); and
(d) All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 23B.08.320 of the Washington Corporation Law allows a Company
to include in its certificate of incorporation a provision which limits a
director's personal liability to the corporation or its shareholders for
monetary damages for conduct as a director, with certain exceptions. The
Company's Articles of Incorporation includes such provision limiting directors'
personal liability in accordance with Section 23B.08.320 of the Washington
Corporation Law.
Additionally, the Company has the power, pursuant to Section
23B.08.510 and 23B.08.570 of the Washington Corporation Law, to indemnify its
directors, officers and other persons for certain acts. Pursuant to its
by-laws, the Company will indemnify its officers, directors and other persons
described in Section 23B.08.510 of the Washington Corporation Law to the full
extent permitted by law. The Company maintains insurance for this purpose.
Such insurance generally insures the directors and officers against claims due
to any breach of duty, neglect, error, misstatement, misleading statement,
omission or other
2
<PAGE> 3
act solely by reason of their being directors and officers and for acts, errors
and omissions by them in the provision of professional services to the Company.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company, 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 of 1933 and is, therefore,
unenforceable. In the event 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 for 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 a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
ITEM 8. EXHIBITS
<TABLE>
<S> <C>
5 Opinion of Heller, Ehrman, White & McAuliffe
24.1 Consent of Heller, Ehrman, White & McAuliffe
(filed as part of Exhibit 5)
24.2 Consent of Price Waterhouse LLP, Independent Auditors
25 Power of Attorney (see page 5)
28.1 Sun Sportswear, Inc. 1989 Employee Stock Option Plan
28.2 Sun Sportswear, Inc. 1989 Director Stock Option Plan
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement; and
3
<PAGE> 4
(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) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for
purposes of determining liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed 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
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
4
<PAGE> 5
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 Kent, State of Washington, on this 31st day of
May, 1995.
SUN SPORTSWEAR, INC.
By /s/ Larry C. Mounger
---------------------------------
Larry C. Mounger
Chairman of the Board, President,
Chief Executive Officer and
Director
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Larry C. Mounger and Kevin C.
James, and each of them, with full power of substitution and full power to act
without the other such person's true and lawful attorney-in-fact and agent for
such person in such person's name, place and stead, in any and all capacities,
to sign any or all amendments (including post-effective amendments) to this
Registration Statement on Form S-8 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises in order to
effectuate the same as fully, to all intents and purposes, as they or such
person might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-8 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Larry C. Mounger Chairman of the Board, May 31, 1995
------------------------------------- President, Chief Executive
Larry C. Mounger Officer and Director
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ L. Kaye Counts Executive Vice President, May 31, 1995
------------------------------------- Chief Operating Officer,
L. Kaye Counts and Director
/s/ James H. Williams Director May 31, 1995
-------------------------------------
James H. Williams
/s/ Paul R. Rollins, Jr. Director May 31, 1995
-------------------------------------
Paul R. Rollins, Jr.
/s/ James A. Walsh Director May 31, 1995
-------------------------------------
James A. Walsh
/s/ Robert A. Pene Director May 31, 1995
-------------------------------------
Robert A. Pene
/s/ Kevin C. James Senior Vice President, May 31, 1995
------------------------------------- Secretary and
Kevin C. James Chief Financial Officer
</TABLE>
6
<PAGE> 7
Index to Exhibits
<TABLE>
<CAPTION>
Sequentially
Item No. Description of Item Numbered Page
- ------- ------------------- -------------
<S> <C> <C>
5 Opinion of Heller, Ehrman, White & McAuliffe
24.1 Consent of Heller, Ehrman, White & McAuliffe
(filed as part of Exhibit 5)
24.2 Consent of Price Waterhouse LLP, Independent Auditors
25 Power of Attorney (see page 5)
28.1 1989 Sun Sportswear, Inc. Employee Stock Option Plan
28.2 1989 Sun Sportswear, Inc. Director Stock Option Plan
</TABLE>
7
<PAGE> 1
June 9, 1995
Sun Sportswear, Inc.
6520 South 190th Street
Kent, Washington 98032
Re: Registration Statement on Form S-8 under the
Securities Act of 1933, as amended
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters
relating to the Registration Statement on Form S-8 which you will be filing
with the Securities and Exchange Commission (the "Registration Statement") in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 520,500 shares of your Common Stock, no par value
("Registered Stock"). Capitalized terms used in this opinion and not otherwise
defined in this opinion have the meanings given them in the Registration
Statement.
The Registered Stock is currently unissued shares. The Registered
Stock is to be sold to your employees or issued to members of your Board of
Directors upon exercise by them of stock options (the "Options") granted as
described in the Registration Statement.
In connection with this opinion, we have, with your consent, assumed
the authenticity of all records, documents and instruments submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the authenticity and conformity to the originals of all records,
documents and instruments submitted to us as copies. We have based our opinion
upon our review of the following documents:
1. Your Restated Articles of Incorporation, certified as of April
11, 1995 by the Secretary of State of the State of Washington as being true and
correct, and certified to us by your Chairman of the Board as being complete
and in full force and effect as of the date of this opinion;
2. Your Bylaws, as amended, certified to us by your Chairman of
the Board as being complete and in full force and effect as of the date of this
opinion;
<PAGE> 2
Sun Sportswear, Inc.
June 9, 1995
Page 2
3. Records of proceedings and actions of your Board of Directors
and shareholders, certified to us by your President as constituting all records
of their proceedings and actions through the date of this opinion relating to
the sale of Registered Stock in accordance with the Registration Statement;
4. A specimen stock certificate evidencing the shares of Common
Stock;
5. The Registration Statement and exhibits thereto; and
6. Information provided by the Company's transfer agent as to the
number of shares of Common Stock outstanding as of June 9, 1995.
This opinion is limited to the federal law of the United States of
America and the law of the State of Washington.
On the basis of and subject to the foregoing, we are of the opinion
that the Registered Stock, when and if issued, delivered and paid for as
contemplated by the Registration Statement, will be duly authorized, validly
issued, fully paid and nonassessable.
Our opinion is qualified to the extent that in the event of a stock
split, share dividend or other reclassification of the Common Stock effected
subsequent to the date hereof, the number of shares of Common Stock issuable
upon the exercise of Options may be adjusted automatically such that the number
of such shares may exceed the number of remaining authorized, but unissued
shares of Common Stock at the time the Options are exercised.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. We disclaim any obligation to advise you of any
developments in areas covered by this opinion that occur after the date of this
opinion.
Very truly yours,
HELLER, EHRMAN, WHITE & McAULIFFE
/s/ Heller Ehrman White & McAuliffe
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 24, 1995 appearing on
page 23 of Sun Sportswear Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1994.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Seattle, Washington
June 7, 1995
<PAGE> 1
EXHIBIT 28.1
SUN SPORTSWEAR, INC.
1989 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of the 1989 Employee Stock Option Plan
(the "Plan") of Sun Sportswear, Inc., a Washington corporation (the "Company")
is to attract, retain, and motivate employees, including employees who may also
be directors of the Company and any present and future subsidiaries of the
Company, who are chosen to receive options, by giving them an opportunity to
acquire Common Stock, no par value, of the Company ("Common Stock"). Options
granted under this Plan may be nonqualified options ("NQOs") or incentive stock
options ("ISOs") intended to meet the requirements of Section 422A of the
Internal Revenue Code of 1986, as it may be amended from time to time (the
"Code"), and if not inconsistent, the requirements of analogous state income
tax laws.
2. Administration. This Plan shall be administered by the Board
of Directors of the Company (the "Board") or by a committee appointed by the
Board (in either case, the "Administrator"). No option shall be granted to (a)
an employee who is also an director of the Company except (i) by the Board when
a majority of the members of the Board, and a majority of the directors acting
in the matter, are disinterested persons, or (ii) by the Administrator when the
Administrator is composed of three or more persons having full authority to act
in the matter and each member of the Administrator is a disinterested person,
or (b) to an officer of the Company except by the Board or (ii) by the
Administrator when the Administrator is composed solely of three or more
persons having full authority to act in the matter and each member of the
Administrator is a disinterested person, unless, in either case, the
Administrator determines that compliance with the foregoing provision is not
necessary to comply with the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, and any successor rule adopted by the
Securities and Exchange Commission (together with any similar successor rule,
"Rule 16b-3") or that Rule 16b-3 is not applicable to the Plan. "Disinterested
Person" for this purpose, shall have the same meaning as in Rule 16b-3. The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company or a subsidiary as it deems proper. Subject to the
provisions of this Plan, the Administrator shall have the authority to select
the persons to receive options under this Plan, to fix the number of shares
that each optionee may purchase, to set the terms and conditions of each option
(including whether each option is an NQO or an ISO), and to determine all other
matters relating to this Plan. No member of the Administrator shall be liable
for any decision, act, or omission on such member's own part respecting this
Plan, or any options granted or shares sold under this Plan, except for those
acts or omissions resulting from such member's own willful misconduct.
1
<PAGE> 2
3. Eligible Persons
3.1 Generally. ISOs may be granted to employees (including
employees who may also be officers or directors) of the Company or any
"subsidiary" of the Company, as defined in the applicable provisions
(currently Section 425) of the Code (an "Affiliate"), who are selected by the
Administrator. NQOs may be granted to employees (including employees who are
also officers or directors) of the Company or any Affiliate who are selected by
the Administrator. Neither David A. Sabey nor any director who is not also an
employee of the Company is eligible to receive options under this Plan.
4. Stock Subject to this Plan. Subject to the other provisions
of this Plan, the total number of shares with respect to which options may be
granted under this Plan is 600,000 shares of Common Stock. Shares delivered
upon the exercise of options may be previously unissued shares, outstanding
shares, or repurchased shares. All such delivered shares, whatever their
source and whether or not repurchased by the Company in accordance with the
terms of the Plan, shall be counted against the 600,000-share limitation.
Shares covered by options that expire or terminate shall again become available
for the grant of options and shall not be counted against the 600,000-share
limitation. The total number of shares with respect to which options may be
granted under the Plan is subject to adjustment as provided in the Plan.
5. Grant of Options. The Company may grant options under this
Plan at any time and from time to time before the Plan terminates. The
Administrator shall specify the date of grant. If the Administrator fails to
specify a grant date, the grant date shall be the date of the action taken by
the Administrator to grant the option. If an option is approved for a person
who is not an employee but is expected to become an employee, the grant date
shall be the date the intended optionee is first treated as an employee for
payroll purposes. Each optionee shall be evidenced by a written stock option
agreement, in form and substance satisfactory to the Company, executed by the
company and the person to whom the option is granted. The failure by the
Company, the optionee, or both to execute such an option agreement shall not
invalidate the grant of the option; no option shall be exercisable, however
until the written stock option agreement is executed by the Company and the
optionee. The option agreement shall specify whether the option it evidences
is an NQO or an ISO.
6. Terms and Conditions to Which All Options Are Subject. All
options granted under this Plan shall be subject to the following terms and
conditions and any other terms and conditions, not inconsistent with this Plan,
that the Administrator imposes when the Company grants an option:
6.1 Time of Option Exercise. Except as necessary to satisfy the
requirements of Section 422A of the Code with respect to ISOs, and subject to
the other provisions of this Plan, an option shall be exercisable in its
entirety at grant or at such times and in such amounts as are specified in the
option agreement. Options shall be exercisable only in increments of 100
shares or larger. However, the Administrator, in its
2
<PAGE> 3
absolute discretion, may later waive any limitations regarding the time at
which an option or portion of an option first becomes exercisable.
6.2 Manner of Exercise. An optionee wishing to exercise an
option shall give written notice to the Company to the attention of the officer
of the Company designated by the Administrator, accompanied by payment of the
exercise price together with such other documentation, including without
limitation a stock purchase agreement in form and substance satisfactory to the
Administrator, as the Administrator may in its discretion require. The date
the Company receives written notice of an exercise hereunder accompanied by any
other documentation required by the Administrator, by payment of the exercise
price and, if required, by payment of any federal, state or local withholding
or employment taxes, including FICA withholding tax, required to be withheld by
virtue of exercise of the option, will be considered as the date the option was
exercised. An optionee or transferee of an optionee shall not have any
privileges as a stockholder with respect to any stock covered by the option
until the date of issuance of a stock certificate for the number of shares
being acquired.
6.3 Payment. Except as provided below, payment in full, in cash
or by check, shall be made for all stock purchased at the time written notice
of exercise of an option is given to the Company. Proceeds of any payment
shall constitute general funds of the Company. At the time an option is
granted or exercised, the Administrator, in the exercise of its absolute
discretion, may authorize payment through delivery by the optionee of Common
Stock already owned by optionee for all or part of the option price. Any
shares so delivered shall be valued at their fair market value as of the date
of exercise of the option, as determined under this Plan; provided, however,
that if the optionee has exercised any portion of any option granted by the
Company by delivery of Common Stock, the optionee may not, within six months
following such exercise, exercise any option granted by this Plan by delivery
of Common Stock.
6.4 Payment of Withholding and Employment Taxes. At the time of
exercise of an option or, in the case of ISOs, upon a disqualifying disposition
of shares received upon the exercise of an ISO, the optionee shall remit to the
Company in cash all applicable federal, state, and local withholding and
employment taxes, including without limitation FICA withholding tax, which, in
the Administrator's judgment, may be payable in connection with the exercise or
disposition.
6.5 Election Regarding Tax Withholding. If and to the extent
authorized by the Administrator in its sole discretion, an optionee may make an
election, by means of a form of election to be prescribed by the Administrator,
to have shares of Common Stock which are acquired upon exercise of the Option
withheld by the Company, or to tender to the Company other shares of Common
Stock or other securities of the Company owned by the optionee (if such shares
have been held by the optionee for at least six months), to pay all or a
portion of the federal, state, and local withholding taxes, including FICA
withholding tax, arising in
3
<PAGE> 4
connection with the exercise of such Option. Any securities so withheld or
tendered will be valued by the Company as of the date of determination of the
amount of tax to be withheld as a result of exercise of such option (the "Tax
Date"). All such elections are subject to the following restrictions:
(a) the election shall be irrevocable;
(b) the election must be made on or prior to the Tax
Date; and
(c) the election is subject at all times to the
disapproval of the Administrator.
In addition, if the directors and officers of the Company are subject to
Section 16 of the Exchange Act (such persons referred to as "Section 16
Persons"), any such election by an optionee who is a Section 16 Person shall be
subject to the following additional limitations:
(d) the election may not be made within six months of the
grant date of the Option the exercise of which resulted in the tax
withholding obligation (except that this limitation shall not apply in
the event of death or disability of such person occurring prior to the
expiration of the six-month period); and
(e) such election must be made either (A) at least six
months prior to the Tax Date, or (B) in any ten business-day period
beginning on the third business day following the date of release by
the Company for publication of quarterly or annual summary statements
of sales or earnings of the Company.
When the Tax Date of a Section 16 Person is deferred until (i) six months after
the exercise of an NQO or (ii) the person sells or otherwise disposes of Common
Stock received upon the exercise of an ISO, and the person makes the share
withholding election described in this paragraph, then the full number of
shares of Common Stock for which the Option is being exercised shall be issued
to the person upon exercise of the option, but the person shall be
unconditionally obligated to tender back and deliver to the Company the proper
number of share of Common Stock on the Tax Date. The Administrator may adopt
procedures which would allow a participant, as part of the election described
in this paragraph, to pay withholding taxes in excess of the statutory minimum,
as long as the amount paid does not exceed the participant's estimated total
federal, state, and local tax obligations associated with the transaction,
including FICA taxes to the extent applicable.
6.6 Exercise After Termination of Employment, Disability, or
Death. If for any reason other than disability (as determined in accordance
with Section 422A(c)(9) of the Code) or death, an optionee ceases to be
employed by the Company or any Affiliate (a "Termination"), then except as
otherwise provided in this paragraph all options granted under the Plan, held
by the optionee at the date of the Termination (the "Termination Date") shall
terminate as of the Termination Date. Options granted
4
<PAGE> 5
under this Plan and held by the optionee as of the Termination Date, to the
extent exercisable on the Termination Date, may be exercised in whole or in
part at any time within three months after the Termination Date or such lesser
period as is specified in the option agreement (but in no event after the
expiration date of the option). Notwithstanding anything in the preceding
sentence, if immediately before the Termination Date the optionee is subject to
Section 16(b) of the Exchange Act with respect to the Company's equity
securities, then with respect to NQOs held by the optionee, the period
following the Termination Date during which an NQO held by the optionee may be
exercised shall be seven months (but in no event after the expiration date of
the option). The Administrator may in its sole discretion agree with an
optionee to extend or modify any of the periods specified above for exercise of
an option following the Termination Date. If an optionee's Termination is by
reason of disability or death, then options held at the Termination Date, to
the extent exercisable on the Termination Date, may be exercised in whole or in
part at anytime within one year after the Termination or any lesser period
specified in the Option Agreement (but in no event after the expiration date of
the option) by the optionee's guardian or legal representative. A transfer of
an optionee from the Company to an Affiliate or vice versa, or from one
Affiliate to another, or a leave of absence duly authorized by the Company,
shall not be deemed a Termination of employment or a break in continuous
employment, so long as the Affiliate remains a parent or subsidiary of the
Company. An optionee who is employed by an Affiliate but not by the Company
shall be deemed to have Terminated employment on the date that the Affiliate is
no longer a subsidiary of the Company.
6.7 Changes in Capital Structure. The existence of outstanding
options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations, or other changes in its or any other
entity's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company's or any
other entity's assets or business, or any other corporate act, whether similar
to the events described above or otherwise. Subject to Section 6.8, if the
Common Stock is increased or decreased in number or changed into or exchanged
for a different number or kind of securities of the Company or any other entity
by reason of a stock split, reverse stock split, stock dividend,
recapitalization, merger, consolidation, acquisition, separation,
reorganization, liquidation, or other event, appropriate adjustments shall be
made in (i) the number and class of shares of stock subject to this Plan and
each option outstanding under this Plan, and (ii) the exercise price of each
outstanding option; provided, however, that the Company shall not be required
to issue fractional shares as a result of any such adjustments. Each such
adjustment shall be subject to approval by the Board of Directors in its sole
discretion.
6.8 Acquisitions and Other Transactions. In connection with the
dissolution or liquidation of the Company or a partial liquidation involving
more than 50 % of the assets of the Company, a merger or reorganization of the
Company in which
5
<PAGE> 6
another entity is the survivor, a merger or reorganization of the Company under
which more than 50% of the shares of the Company outstanding prior to the
merger or reorganization are converted into cash or into another security, a
sale of more than 50% of the Company's assets, or a similar event which the
Administrator determines, in its absolute discretion, would materially alter
the structure of the Company or its ownership, the Administrator, upon 10
business days prior written notice to the optionee, may do one or more of the
following:
(a) shorten the period during which an option is
exercisable (provided it remains exercisable, to the extent otherwise
exercisable, for at least 10 business days after the date the notice
is given) and provide that options not exercised prior to the
effective date of the dissolution, liquidation, reorganization,
merger, sale, or other event shall terminate upon the effective date
of such event;
(b) accelerate any vesting schedule to which an option is
subject;
(c) arrange to have the surviving corporation grant
reasonably equivalent replacement options with adjustments in the
number and kind of securities and option prices; or
(d) cancel options upon payment to the optionee in cash,
with respect to each option to the extent then exercisable, of an
amount which, in the absolute discretion of the Administrator, is
determined to be equivalent to anyexcess of the fair market value (at
the effective time of the dissolution, liquidation, reorganization,
merger, sale, or other event) of the consideration that the optionee
would have received if the option had been exercised before the
effective time over the exercise price of the option.
The actions described in the Section may be taken without regard to any
resulting tax consequences to the optionee.
6.9 Nonassignability of Option Rights. No option granted under
this Plan shall be assignable or otherwise transferable by the optionee except
by will or by the laws of descent and distribution. During the life of the
optionee, an option shall be exercisable only by the optionee.
6.10 Securities Laws. No option shall be granted or exercised if
the Company or its counsel determines that such grant or exercise would not be
in compliance with federal or state securities laws. The Company shall be
under no obligation, however, to determine compliance with such laws.
7. Terms and Conditions to Which Only NQOs Are Subject. Options
granted under this Plan which are designated as NQOs shall be subject to the
following terms and conditions, in addition to the terms and conditions set
forth in Section 6:
7.1 Exercise Price. The exercise price of an NQO shall be not
less than the fair market value of the stock subject to the option on the grant
date.
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7.2 Option Term. Unless an earlier expiration date is specified
by the Administrator at the time of grant, each NQO granted under this Plan
shall expire ten years and two days from the date of its grant.
7.3 Special Blue Sky Restrictions. If required by any state
securities authority as a condition of qualifying the offer and sale of options
and Common Stock under this Plan, then during the period when such
qualification is in effect (the "Blue Sky Period") (i) the exercise price of an
NQO granted to any person who owns, directly or indirectly, (or is treated as
owning by reason of attribution rules, the current version of which is set
forth in Code Section 425) stock of the Company constituting more than ten
percent of the total combined voting power of all classes of the outstanding
stock of the Company or of any Affiliate (a "Ten Percent Shareholder") shall in
no event be less than 110 percent of the fair market value of the stock subject
to the option on the grant date; and (ii) an NQO granted to any Ten Percent
Shareholder shall expire no later than five years from the grant date.
8. Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions, in addition to the terms and conditions set
forth in Section 6:
8.1 Exercise Price. The exercise price of an ISO shall be
determined in accordance with the applicable provisions of the Code and shall
in no event be less than the fair market value of the stock covered by the
option at the time the option is granted, except that the exercise price of an
ISO granted to any Ten Percent Shareholder shall in no event be less than 110
percent of such fair market value.
8.2 Option Term. Unless an earlier expiration date is specified
by the Administrator at the time of grant, each ISO granted under this Plan
shall expire ten years and two days from the date of its grant, except that an
ISO granted to any Ten Percent Shareholder shall expire no later than five
years from the date of its grant.
8.3 Disqualifying Dispositions; Notice to Company. If stock
acquired by exercise of an ISO granted pursuant to this Plan is disposed of
within two years from the date of grant of the option or within one year after
the transfer of the stock to the optionee, the holder of the stock immediately
prior to the disposition shall promptly notify the Company in writing of the
date and terms of the disposition and shall provide such other information
regarding the disposition as the Company may reasonably require.
8.4 Limitations on ISO Exercise. Notwithstanding any other
provision in this Plan, ISOs options granted to an optionee under this Plan and
all ISOs plans of the Company or its Affiliates may not "vest" at a rate of
more than $100,000 worth of stock (measured on the grant date(s)) in any
calendar year. For purposes of the preceding sentence, an option "vests" when
it becomes exercisable for the first time. If, by their terms, such
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ISOs taken together would vest at a faster rate, and unless otherwise provided
by the Administrator, the vesting limitation described above shall be applied
by deferring the exercisability of those options or portions of options which
have the highest per share exercise prices. The options or portions of
options, the exercisability of which is so deferred, shall become exercisable
on the first day of the first subsequent calendar year during which they may be
exercised, as determined by applying these same principles and all other
provisions of the Plan including those relating to the expiration and
termination of options. In no event, however, will the operation of this
Section cause an option to vest before its terms.
9. Determination of Value. For purposes of the Plan, the value
of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the security is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities
Dealers Automated Quotation System, its fair market value shall be the
closing sales price for such stock or the closing bid if no sales were
reported, as quoted on such system or exchange (or the largest such
exchange) for the date the value is to be determined (or if there are
no sales for such date, then for the last preceding business day on
which there were sales), as reported in the Wall Street Journal or
similar publication.
(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
fair market value shall be the mean between the high bid and low asked
prices for the stock on the date the value is to be determined (or if
there are no quoted prices for that date, then for the last preceding
business day on which there were quoted prices).
(c) In the absence of an established market for the
security the fair market value shall be determined in good faith by
the Administrator, with reference to the Company's net worth,
prospective earning power, dividend-paying capacity and other relevant
factors, including the goodwill of the Company, the economic outlook
in the Company's industry, the Company's position in the industry and
its management, and the values of stock of other corporations in the
same or a similar line of business.
10. Employment Relationship. Nothing in this Plan or any option
granted under this Plan shall interfere with or limit in any way the right of
the Company or any of its Affiliates to terminate any optionee's employment at
any time, nor confer upon any optionee any right to continue in the employ of
the Company or any of its Affiliates.
11. Financial Information. If required by any state securities
authority as a condition of qualification of the offer and sale of options and
Common Stock under this Plan, then during
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<PAGE> 9
the period when such qualification is in effect, the Company shall provide to
each option holder a copy of the annual financial statements of the Company as
prepared either by the Company or independent certified public accountants of
the Company. Such financial statements shall be delivered as soon as
practicable following the end of the Company's fiscal year.
12. Shareholder Approval and Term. This Plan shall be subject to
approval by the holders of a majority of the outstanding voting stock of the
Company within 12 months after its adoption by the Board. Options may be
granted, but not exercised, before the shareholders approve this Plan.
However, if the shareholders fail to approve the Plan within the required time
period, any options granted under this Plan shall be cancelled. This Plan
shall terminate ten years after adoption by the Board unless terminated earlier
by the Board. The Board may terminate this Plan at any time without
shareholder approval. No options shall be granted after termination of this
Plan, but termination shall not affect rights and obligations under then
outstanding options.
13. Amendment, Suspension, or Termination of This Plan. The
Board of Directors may amend, alter, suspend, or discontinue this Plan at any
time. Notwithstanding any provision of this Plan or any option agreement
entered into in connection with this Plan, this Plan shall automatically
terminate, and any options granted under this Plan shall automatically
terminate, if the Company does not complete the initial public offering of its
Common Stock by December 31, 1989. Without the consent of the optionee, no
amendment may affect outstanding options except to conform this Plan and ISOs
granted under this Plan to federal or other tax laws relating to ISOs. No
amendment shall require shareholder approval unless shareholder approval is
required to preserve ISO treatment for tax purposes or the Board otherwise
concludes that shareholder approval is advisable in order to comply with the
provisions of Rule 16b-3 or otherwise. The Board of Directors may also, at any
time without shareholder approval, amend the terms of any option outstanding
under the Plan, provided that the optionee consents to such amendment.
* * * *
Plan adopted by the Board of Directors on: October 2, 1989
Plan amended by the Board of Directors on: April 29, 1994
Plan approved by the Sole Shareholder on: October 2, 1989
Plan amended at the Annual Meeting of Shareholders on: May 20, 1994
9
<PAGE> 1
EXHIBIT 28.2
SUN SPORTSWEAR, INC.
1989 DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of the 1989 Director Stock Option Plan
(the "Plan") of Sun Sportswear, Inc., a Washington corporation (the "Company")
is to compensate non-employee members of the Company's Board of Directors and
to provided a means for those directors to acquire shares of Company Common
Stock.
2. Definitions. The following terms used in this Plan have the
meanings set forth below:
"Administrator" has the meaning given in Section 3.
"Annual Grant Date" means, for each calendar year, the date on
which the shareholders of the Company have their regular annual meeting.
"Board" means the Board of Directors of the Company.
"Common Stock" means the common stock no par value of the
Company.
"Eligible Director" means any person who is a member of the
Board and who is not and was not at any time within one year prior to his or
her election to the Board a full or part-time employee of the Company or of any
subsidiary of the Company; provided, however, that David A. Sabey is not and
cannot be an Eligible Director.
"Grant Date" means the Initial Grant Date or the Annual Grant
Date, as appropriate.
"Initial Grant Date" means, with respect to each Eligible
Director, the earlier of (i) the date such Eligible Director is first elected
as a member of the Board, or (ii) October 2, 1993, except that the Initial
Grant Date for Eligible Directors first elected to the Board prior to the
initial public offering of Common Stock shall be the date upon which options
are first granted under the Company's 1989 Employee Stock Option Plan.
"Option" means an option to purchase Shares granted under this
Plan.
"Option Agreement" means the written agreement described in
Section 6.
"Shares" means shares of Common Stock.
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3. Administration. This Plan shall be administered by the Board
or by a committee composed of disinterested persons appointed by the Board, or
by a disinterested person appointed by the Board (in each case, the
"Administrator"), unless the Administrator determines that compliance with the
foregoing provision is not necessary to comply with the provisions of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, and any successor
rule adopted by the Securities and Exchange Commission. "Disinterested Person"
for these purposes shall have the meaning set forth in Rule 16b-3. All
decisions, interpretations and other actions of the Administrator shall be
final and binding on all persons. The Administrator may delegate
nondiscretionary administrative duties to such employees of the Company or a
subsidiary as it deems proper. No member of the Administrator shall be liable
for any decision, act, or omission on such member's own part respecting this
Plan, or any options granted or shares sold under this Plan, except for those
acts or omissions resulting from such member's own willful misconduct.
4. Shares Subject to Plan.
(a) Aggregate Number. Subject to the other provisions of
this Plan, the total number of shares with respect to which Options may be
granted under this Plan is 60,000 shares of Common Stock. Shares delivered
upon exercise of Options may be previously unissued shares, outstanding shares,
or repurchased shares. All such delivered shares, however, whatever their
source and whether or not repurchased by the Company in accordance with the
terms of the Plan, shall be counted against the 60,000-share limitation.
Shares covered by Options that expire or terminate shall again become available
for the grant of Options and shall not be counted against the 60,000-share
limitation. The total number of shares with respect to which Options may be
granted under the Plan is subject to adjustment as provided in the Plan.
(b) Rights as Shareholder. An Eligible Director shall
have no rights as a shareholder with respect to Shares acquired by exercise of
an Option until the issuance (as evidenced by the appropriate entry on the
books of the Company or a duly authorized transfer agent) of a stock
certificate evidencing the Shares. Subject to Sections (e) and (f) of this
Plan, no adjustment shall be made for dividends or other events for which the
record date is prior to the date the certificate is issued.
5. Nondiscretionary Grants.
(a) Initial Grant. On the Initial Grant Date, each
Eligible Director, other than David J. Taylor, shall receive the grant of an
Option to purchase 5,000 Shares, and David J. Taylor shall receive the grant of
an Option to purchase 10,000 Shares.
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(b) Regular Annual Grants. On each Annual Grant Date,
immediately after the annual election of directors, each Eligible Director then
in office shall receive the grant of an Option to purchase 1,000 Shares,
provided that no Eligible Director shall receive under this Plan Options to
purchase an aggregate of more than 20,000 Shares.
(c) Adjustment. The number of shares for which Options
are granted in accordance with this Section 5 and the number of Shares subject
to any Option shall be subject to adjustment in accordance with Section 6(e).
(d) Limitation on Other Grants. The Administrator shall
have no discretion to grant Options under this Plan to any other person or in
any other amount other than as set forth in Section 6(a) or (b) of this Plan.
6. Terms of Option Agreements. Upon the grant of each Option,
the Company and the Eligible Director shall enter into an Option Agreement
which shall specify the Grant Date and the exercise price, and shall include or
incorporate by reference the substance of all of the following provisions and
such other provisions consistent with this Plan as the Board may determine:
(a) Term. The term of each Option shall be five years
from its Grant Date, subject to earlier termination in accordance with Sections
6(f) or 6(g) of this Plan.
(b) Exercise Schedule. An Option shall be exercisable on
its entirety on the first anniversary of the applicable Grant Date. An Option
may exercised only in increments of 100 Shares or larger.
(c) Purchase Price. The purchase price of the Shares
subject to each Option shall be the fair market value of the stock covered by
the Option as of the Grant Date.
(d) Transferability. No Option shall be transferable
otherwise than by will or the laws of descent and distribution. An Option
shall be exercisable during the Eligible Director's lifetime only by the
Eligible Director.
(e) Changes in Capital Structure. The existence of
outstanding Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations, or other changes in its or any other
entity's capital structure or business, any merger or consolidation, any
issuance of bonds, debenture, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company's or any
other entity's assets or business, or any other corporate act, whether similar
to the events described above or otherwise. Subject to Section 6(f) of this
Plan, if the Common
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Stock is increased or decreased in number or changed into or exchanged for a
different number or kind of securities of the Company or any other entity by
reason of a stock split, reverse stock split, stock dividend, recapitalization,
merger, consolidation, acquisition, separation, reorganization, liquidation, or
other event, appropriate adjustments shall be made in (i) the number and class
of shares of stock subject to this Plan and each Option outstanding under this
Plan, and (ii) the exercise price of each outstanding Option; provided,
however, that the Company shall not be required to issue fractional shares as a
result of any such adjustments. Each such adjustment shall be subject to
approval by the Administrator in its sole discretion.
(f) Acquisitions and Other Transactions. In connection
with the dissolution or liquidation of the Company or a partial liquidation
involving more than 50 % of the assets of the Company, a merger or
reorganization of the Company in which another entity is the survivor, a merger
or reorganization of the Company under which more than 50% of the shares of the
Company outstanding prior to the merger or reorganization are converted into
cash or into another security, a sale of more than 50% of the Company's assets,
or a similar event which the Administrator determines would materially alter
the structure of the Company or its ownership, the Administrator, upon 10
business days prior written notice to the Eligible Director, may do one or more
of the following:
(i) shorten the period during which an Option is exercisable
(provided it remains exercisable, to the extent otherwise exercisable, for at
least 10 business days after the date the notice is given) and provide that
Options not exercised prior to the effective date of the dissolution,
liquidation, reorganization, merger, sale, or other event shall terminate upon
the effective date of such event;
(ii) accelerate any vesting schedule to which an Option is
subject;
(iii) arrange to have the surviving corporation grant
reasonably equivalent replacement options with adjustments in the number and
kind of securities and option prices; or
(iv) cancel Options upon payment to the Eligible Director in
cash, with respect to each Option to the extent then exercisable, of an amount
which, in the absolute discretion of the Administrator, is determined to be
equivalent to any excess of the fair market value (at the effective time of the
dissolution, liquidation, reorganization, merger, sale, or other event) of the
consideration that the optionee would have received if the option had been
exercised before the effective time over the exercise price of the option.
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The actions described in the Section may be taken without regard to any
resulting tax consequences to the Eligible Director.
(g) Termination of Directorship; Death; Disability. If
for any reason other than death or permanent and total disability, an Eligible
Director ceases to be a member of the Board, Options held at the date of
termination (to the extent then exercisable) may be exercised in whole or in
part at any time within three months after the date of such termination, or
such other period as is specified in the Option Agreement but not thereafter.
Notwithstanding anything in the preceding sentence, if immediately before the
Termination Date the Eligible Director is subject to Section 16(b) of the
Exchange Act with respect to the Company's equity securities, then with respect
to Options held by the Eligible Director, the period following the termination
date during which an Option held by the optionee may be exercised shall be
seven months. If an Eligible Director dies or becomes permanently and totally
disabled (within the meaning of Section 422(e) (3) of the Code) while he or she
is a member of the Board (or, in the event of death, within the period that the
Option remains exercisable after the Eligible Director ceases to be a member of
the Board), Options then held (to the extent exercisable on the date of death
or permanent and total disability) may be exercised in whole or in part by the
Eligible Director, by the Eligible Director's personal representative, or by
the person to whom the Option is transferred by will or the laws of descent and
distribution, at anytime within one year after the date of death or permanent
and total disability of the Eligible Director or if lesser, the period
specified in the Option Agreement. Notwithstanding any provision of this
Section 6(g), Options shall in no case be exercisable after the expiration date
of the Option as provided in Section 5(a) of this Plan.
(h) Modification, Extension and Renewal of Options.
Within the limitations of this Plan, the Administrator may modify, extend or
renew outstanding Options or may accept the cancellation thereof (to the extent
not previously exercised) for the granting of new Options in substitution
therefor. Notwithstanding the foregoing, no Options granted pursuant to
subsections 6(a) or 6(b) may be modified and no modification shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
an Option.
The failure by the Company, the Eligible Director, or both, to execute an
Option Agreement shall not invalidate the grant of the Option; no Option shall
be exercisable, however, until the written Option Agreement is executed by the
Company and the Eligible Director.
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7. Payment and Taxes upon Exercise of Options.
(a) Payment. Except as provided below, payment in full,
in cash or by check, shall be made for all stock purchased at the time the
written notice of exercise of an option is given to the Company. Proceeds of
any payment shall constitute general funds of the Company. At the option of an
Eligible Director, the Eligible Director may make payment through delivery by
the Eligible Director of Common Stock already owned by the Eligible Director
for all or part of the option price. Any shares so delivered shall be valued
at their fair market value as of the date of exercise of the Option, as
determined under this Plan; provided, however, that if an Eligible Director has
exercised any portion of any Option granted by the Company by delivery of
Common Stock, the Eligible Director may not, within six months following such
exercise, exercise any Option granted by this Plan by delivery of Common Stock.
(b) Payment of Withholding and Employment Taxes. At the
time of exercise of an Option, the Eligible Director shall remit to the Company
in cash all applicable Federal, State, and Local withholding and employment
taxes, including without limitation, FICA withholding tax, which, in the
Administrator's judgment, may be payable in connection with the exercise or
disposition.
(c) Election Regarding Tax Withholding. If and to the
extent authorized by the Administrator, an Eligible Director may make an
election, by means of a form of election to be prescribed by the Administrator,
to have shares of Common Stock which are acquired upon exercise of the Option
withheld by the Company, or to tender to the Company other shares of Common
Stock or other securities of the Company owned by the Eligible Director (if
such shares have been held by the Eligible Director for at least six months),
to pay all or a portion of the Federal, State, and Local withholding taxes,
including FICA withholding tax, arising in connection with the exercise of such
Option. Any securities so withheld or tendered will be valued by the Company
as of the date of determination of the amount of tax to be withheld as a result
of exercise of such option (the "Tax Date"). All such elections are subject to
the following restrictions:
(i) the election shall be irrevocable;
(ii) the election must be made on or prior to the Tax
Date; and
(iii) the election is subject at all times to the disapproval
of the Administrator.
In addition, if the Eligible Directors of the Company are subject to Section 16
of the Exchange Act (such persons referred to as
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"Section 16 Persons"), any such election by an Eligible Director who is a
Section 16 Person shall be subject to the following additional limitations:
(iv) the election may not be made within six months of the
grant date of the Option the exercise of which resulted in the tax withholding
obligation (except that this limitation shall not apply in the event of death
or disability of such person occurring prior to the expiration of the six-month
period); and
(v) such election must be made either (A) at least six months
prior to the Tax Date, or (B) in any ten business-day period beginning on the
third business day following the date of release by the Company for publication
of quarterly or annual summary statements of sales or earnings of the Company.
When the Tax Date of a Section 16 Person is deferred until six months after the
exercise of an Option and the person makes the share withholding election
described in this paragraph, then the full number of Shares for which the
Option is being exercised shall be issued to the person upon exercise of the
Option, but the person shall be unconditionally obligated to tender back and
deliver to the Company the proper number of shares of Common Stock on the Tax
Date. The Administrator may adopt procedures which would allow an Eligible
Director, as part of the election described in this paragraph, to pay
withholding taxes in excess of the statutory minimum, as long as the amount
paid does not exceed the Eligible Director's estimated total Federal, State,
and Local tax obligations associated with the transaction, including FICA taxes
to the extent applicable.
8. Use of Proceeds. Proceeds from the sale of Shares pursuant to
this Plan shall be used by the Company for general corporate purposes.
9. Determination of Value. For purposes of the Plan, the value
of Shares or other securities of the Company shall be determined as follows:
(a) If the security is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers Automated
Quotation System, its fair market value shall be the closing sales price for
the Security or the closing bid if no sales were reported, as quoted on such
system or exchange (or the largest such exchange) for the date the value is to
be determined (or if there are no sales for such date, then for the last
preceding business day on which there were sales), as reported in the Wall
Street Journal or similar publication.
(b) If the security is regularly quoted by a recognized
securities dealer but selling prices are not reported, its fair market value
shall be the mean between the high bid and
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<PAGE> 8
low asked prices for the security on the date the value is to be determined (or
if there are no quoted prices for that date, then for the last preceding
business day on which there were quoted prices).
(c) In the absence of an established market for the
security the fair market value shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry and its management, and the values of stock
of other corporations in the same or a similar line of business.
10. Legal Requirements. No option shall be granted or exercised
if the Company or its counsel determines that such grant or exercise would not
be in compliance with Federal or State securities laws. The Company shall be
under no obligation, however, to determine compliance with such laws.
11. Amendment or Termination of Plan. The Board of Directors may
amend, alter, suspend, or discontinue this Plan at any time, except that the
provisions of this Plan relating to (i) the persons eligible to receive
Options; (ii) the timing of grants of Options; (iii) the amounts of securities
to be granted to individual recipients of Options; or (iv) the requirement of
administration by a disinterested person or persons, shall not be amended more
than once every six months, other than to comport with changes in the Internal
Revenue Code or the rules thereunder, unless the Administrator determines that
compliance with the foregoing provision is not necessary to comply with Rule
16b-3. Notwithstanding any provision of this Plan or any Option Agreement,
this Plan shall automatically terminate,and any Options outstanding under this
Plan shall automatically terminate, if the Company does not complete the
initial public offering of its Shares by December 31, 1989. Without the
consent of the holder of the Option, no amendment may affect outstanding
Options except to conform this Plan and Options granted under this Plan to
Federal tax or other laws relating to Options. No amendment shall require
shareholder approval unless
(a) the amendment would:
(i) increase the total number of shares reserved for issuance
under this Plan or issuable to any individual under this Plan;
(ii) extend the term of this Plan;
(iii) change the class of persons eligible to receive Options
under this Plan;
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(iv) change the timing of the grants of Options under this
Plan, or
(b) the Board concludes that shareholder approval is
otherwise advisable in order to comply with the provisions of Rule 16b-3 or
otherwise, unless the Board determines that compliance with the foregoing
provisions is not necessary to comply with Rule 16b-3. The Administrator may
also, at any time without shareholder approval, amend the terms of any Option
outstanding under the Plan, provided that the Eligible Director consents to
such amendment.
12. Shareholder Approval and Term. This Plan shall be subject to
approval by the holders of a majority of the outstanding voting stock of the
Company within 12 months after its adoption by the Board. Options may be
granted, but not exercised, before the shareholders approve this Plan.
However, if the shareholders fail to approve the Plan within the required time
period, any Options granted under this Plan shall be cancelled. This Plan
shall terminate ten years after adoption by the Board unless terminated earlier
by the Board. The Board may terminate this Plan at any time without
shareholder approval. No Options shall be granted after termination of this
Plan, but termination shall not affect rights and obligations under then
outstanding Options.
* * * * * * * * * * * *
Plan adopted by the Board of Directors on: October 2, 1989
Plan approved by the Sole Shareholder on: October 2, 1989
9
