<PAGE>
As filed with the Securities and Exchange Commission on May 30, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
MORROW SNOWBOARDS, INC.
(Exact name of Registrant as specified in its charter)
OREGON 93-1011046
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2600 PRINGLE ROAD, S.E.
SALEM, OREGON 97302
(Address of Principal Executive Offices, including zip code)
MORROW SNOWBOARDS, INC. 1990 AMENDED AND RESTATED STOCK OPTION PLAN
MORROW SNOWBOARDS, INC. STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
(Full titles of the plans)
DENNIS R. SHELTON
2600 PRINGLE ROAD, S.E.
SALEM, OREGON 97302
(503) 375-9300
(Name, address and telephone number, including area code, of agent for service)
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Copy to:
CYNTHIA CLARFIELD HESS, ESQ.
SEHAR S. AHMAD, ESQ.
PERKINS COIE
1211 S.W. FIFTH AVENUE, SUITE 1500
PORTLAND, OREGON 97204
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED(1) OFFERING PRICE PER SHARE(3) AGGREGATE OFFERING PRICE(3) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, no par value
per share:
Morrow Snowboards, Inc.
1990 Stock Option Plan 400,000(2) $10.13 $4,052,000 $1,397.24
Morrow Snowboards, Inc. Stock
Option Plan for Non-
Employee Directors
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</TABLE>
(1) Together with an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance under the
Morrow Snowboards, Inc. 1990 Amended and Restated Stock Option Plan (the
"1990 Plan") and the Morrow Snowboards, Inc. Stock Option Plan for Non-
Employee Directors (the "Directors Plan") as the result of any future stock
split, stock dividend or similar adjustment of the outstanding Common Stock
of the Registrant.
(2) Options granted pursuant to the Directors Plan reduce the number of
underlying shares available under the 1990 Plan on a one-to-one basis.
(3) Estimated pursuant to Rule 457(h) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee. The
price per share is estimated to be $10.13 based on the average of the high
and low quoted for the Common Stock in the over-the-counter market on
May 24, 1996 as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 filed with the Securities and Exchange Commission
(the "Commission");
(b) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the fiscal year covered by the Form 10-K
referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained
in the Registration Statement on Form 8-A filed with the Commission on
October 13, 1995 under Section 12(g) of the Exchange Act and as amended by
Form 8-A/A filed with the Commission on November 21, 1995 and including any
amendment or reports filed for the purpose of updating such description.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, prior to the
filing of a post-effective amendment which indicates that the securities offered
hereby have been sold or which deregisters the securities covered hereby then
remaining unsold, shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As an Oregon corporation the Registrant is subject to the Oregon
Business Corporation Act ("OBCA") and the exculpation from liability and
indemnification provisions contained therein. Pursuant to Section 60.047(2)(d)
of the OBCA, Article 16 of the Registrant's Amended and Restated Articles of
Incorporation (the "Articles") eliminates the liability of the Registrant's
directors to the Registrant or its shareholders, except for any liability
related to (i) breach of the duty of loyalty; (ii) acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law;
(iii) any unlawful distribution under ORS 60.367; or (iv) any transaction from
which the director derived an improper personal benefit.
Section 60.391 of the OBCA allows corporations to indemnify their
directors and officers against liability where the director or officer has acted
in good faith and with a reasonable belief that actions taken were in the best
interests of the corporation or at least not opposed to the corporation's best
interests and, if in a criminal proceeding, the individual had no reasonable
cause to believe the conduct in question was unlawful. Under the OBCA,
corporations may not indemnify against liability in connection with a claim by
or in the right of the corporation or for any improper personal benefit in which
the director or officer was adjudged liable to the corporation. Section 60.394
of the OBCA mandates indemnification for all reasonable expenses incurred in the
successful defense of any claim made or threatened whether or not such claim was
by or in the right of the corporation. Finally, pursuant to the Section 60.401
of the OBCA, a court may order indemnification in view of all the relevant
circumstances, whether or not the director or officer met the good-faith and
reasonable belief standards of conduct set out in Section 60.391 of the OBCA.
Section 60.414 of the OBCA also provides that the statutory
indemnification provisions are not deemed exclusive of any other rights to which
directors or officers may be entitled under a corporation's articles of
incorporation or bylaws, any agreement, general or specific action of the board
of directors, vote of shareholders or otherwise.
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The Articles provide that the Registrant is required to indemnify its
current and former directors to the fullest extent permitted by law and may
indemnify its officers, employees or agents. Indemnification Agreements executed
by all directors and officers of the Registrant obligate the Registrant to
indemnify such individuals for liabilities incurred by such individuals while
serving as directors or officers of the Registrant.
ITEM 8. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------------- -----------------------------------------------------------------
5.1 Opinion of Perkins Coie regarding legality of the Common Stock
being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in the opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 Morrow Snowboards, Inc. 1990 Stock Option Plan
99.2 Morrow Snowboards, Inc. Stock Option Plan for Non-Employee
Directors
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, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) above 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 Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefits plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
II-2
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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 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 Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in 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 Securities 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, as
amended, 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 Salem, State of Oregon, on May 30, 1996.
MORROW SNOWBOARDS, INC.
By: /S/ DENNIS R. SHELTON
-----------------------------------------
Dennis R. Shelton
President and Chief Operating Officer
POWER OF ATTORNEY
EACH PERSON WHOSE INDIVIDUAL SIGNATURE APPEARS BELOW HEREBY AUTHORIZES
DENNIS R. SHELTON AND DAVID S. CLEARY AND EACH OF THEM AS ATTORNEYS-IN-FACT,
WITH FULL POWER OF SUBSTITUTION, TO EXECUTE IN THE NAME AND ON BEHALF OF SUCH
PERSON, INDIVIDUALLY AND IN EACH CAPACITY STATED BELOW, AND TO FILE, ANY AND ALL
AMENDMENTS TO THIS REGISTRATION STATEMENT, INCLUDING ANY AND ALL POST-EFFECTIVE
AMENDMENTS WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY REGULATORY
AUTHORITY.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities indicated on May 30, 1996.
SIGNATURE TITLE
--------- -----
/s/ Dennis R. Shelton President and Chief Operating Officer
- --------------------------------------- and Director
Dennis R. Shelton (Principal Executive Officer)
/s/ David S. Cleary Chief Financial Officer, Vice President-
- --------------------------------------- Finance and Secretary
David S. Cleary (Principal Financial Officer and
Principal Accounting Officer)
/s/ Ray E. Morrow Chairman of the Board
- ---------------------------------------
Ray E. Morrow
/s/ Gregory M. Eide Director
- ---------------------------------------
Gregory M. Eide
/s/ Erik J. Krieger Director
- ---------------------------------------
Erik J. Krieger
/s/ James V. Zaccaro Director
- ---------------------------------------
James V. Zaccaro
/s/ Maurice C. Bickert Director
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Maurice C. Bickert
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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5.1 Opinion of Perkins Coie regarding legality of the Common Stock
being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in the opinion filed as Exhibit
5.1)
24.1 Power of Attorney (see signature page)
99.1 Morrow Snowboards, Inc. 1990 Stock Option Plan
99.2 Morrow Snowboards, Inc. Stock Option Plan for Non-Employee
Directors
<PAGE>
Exhibit 5.1
May 30, 1996
Morrow Snowboards, Inc.
2600 Pringle Road, SE
Salem, OR 97302
RE: 400,000 SHARES OF COMMON STOCK (NO PAR VALUE) OF MORROW
SNOWBOARDS, INC. (THE "COMPANY")
Gentlemen and Ladies:
We have acted as counsel to the Company in connection with the
preparation of a Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), to be
filed with the Securities and Exchange Commission with respect to an aggregate
of 400,000 shares of Common Stock, no par value of the Company (the "Shares"),
which may be issued pursuant to the Morrow Snowboards, Inc. 1990 Amended and
Restated Stock Option Plan, and the Morrow Snowboards, Inc. Stock Option Plan
for Non-Employee Directors (collectively, the "Plans"). We have examined the
Registration Statement and such documents and records of the Company and other
documents as we have deemed necessary for the purpose of this opinion.
We are of the opinion that the Shares that will be issued upon the
exercise of stock options granted pursuant to the Plans have been duly
authorized and that, upon the receipt of the consideration therefor in
accordance with the terms of the Plans and issuance thereof by the Company,
the Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. 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,
PERKINS COIE
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 pertaining to Morrow
Snowboards, Inc. of our reports dated February 16, 1996, included in Morrow
Snowboards, Inc. and subsidiaries Form 10-K for the year ended December 31,
1995, filed with the Securities and Exchange Commission and to all references to
our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Portland, Oregon
May 30, 1996
<PAGE>
MORROW SNOWBOARDS INC.
1990 AMENDED AND RESTATED STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Morrow Snowboards, Inc. 1990 Amended and Restated Stock
Option Plan (this "Plan") is to provide a means whereby selected employees,
directors, officers, agents, consultants, advisors and independent contractors
of Morrow Snowboards Inc. (the "Company"), or of any parent or subsidiary (as
defined in subsection 5.8 and referred to hereinafter as "related corporations")
thereof, may be granted incentive stock options and/or nonqualified stock
options to purchase the Common Stock (as defined in Section 3) of the Company,
in order to attract and retain the services or advice of such employees,
directors, officers, agents, consultants, advisors and independent contractors
and to provide added incentive to such persons by encouraging stock ownership in
the Company. This Plan has also been referred to as the 1995 Amended and
Restated Stock Option Plan.
SECTION 2. ADMINISTRATION
This Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee to administer this Plan, by such committee. The administrator of this
Plan shall hereinafter be referred to as the "Plan Administrator."
In the event a member of the Plan Administrator may be eligible, subject to
the restrictions set forth in Section 4, to participate in this Plan, no member
of the Plan Administrator shall vote with respect to the granting of an option
hereunder to himself or herself, as the case may be, and, if state corporate law
does not permit a committee to grant options to directors, then any option
granted under this Plan to a director for his or her services as such shall be
approved by the full Board.
The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
from time to time remove members from, or add members to, the committee.
Vacancies on the committee, however caused, shall be filled by the Board.
With respect to grants made under this Plan to individuals who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan Administrator shall be constituted at all times so as to meet
the requirements of Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act if any of the
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Company's equity securities are registered pursuant to Section 12(b) or 12(g) of
the Exchange Act.
2.1 PROCEDURES
The Board shall designate one of the members of the Plan Administrator as
chairman. The Plan Administrator may hold meetings at such times and places as
it shall determine. The acts of a majority of the members of the Plan
Administrator present at meetings at which a quorum exists, or acts reduced to
or approved in writing by all Plan Administrator members, shall be valid acts of
the Plan Administrator.
2.2 RESPONSIBILITIES
Except for the terms and conditions explicitly set forth in this Plan, the
Plan Administrator 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 option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
correspond to the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations thereunder and any amendments
thereto.
2.3 RULE 16B-3 COMPLIANCE AND BIFURCATION OF PLAN
It is the intention of the Company that, if any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, this Plan shall comply in all respects with Rule 16b-3 under the Exchange
Act. If any Plan provision is later found not to be in compliance with such
Section, the provision shall be deemed null and void, and in all events this
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3.
Notwithstanding anything in this Plan to the contrary, the Board, in its
absolute discretion, may bifurcate this Plan so as to restrict, limit or
condition the application of any provision of this Plan to participants who are
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning this Plan with respect to other participants.
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SECTION 3. SHARES SUBJECT TO THIS PLAN
The shares subject to this Plan shall be the Company's common stock, no par
value per share (the "Common Stock"), currently authorized but unissued or now
held or subsequently acquired by the Company. Subject to adjustment as provided
in Section 7, the aggregate amount of Common Stock to be delivered upon the
exercise of all options granted under this Plan shall not exceed 450,000 shares
as such Common Stock was constituted on January 26, 1995. If any option granted
under this Plan shall expire or be surrendered, exchanged for another option,
cancelled or terminated for any reason without having been exercised in full,
the unpurchased shares subject thereto shall thereupon again be available for
purposes of this Plan, including for replacement options which may be granted in
exchange for such expired, surrendered, exchanged, cancelled or terminated
options.
SECTION 4. ELIGIBILITY
An incentive stock option may be granted only to an individual who, at the
time the option is granted, is an employee of the Company or a related
corporation. A nonqualified stock option may be granted to any employee,
director, officer, agent, consultant, advisor or independent contractor of the
Company or any related corporation, whether an individual or an entity. Any
party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
Options granted under this Plan shall be evidenced by written agreements
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with this
Plan. Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 NUMBER OF SHARES AND PRICE
The maximum number of shares that may be purchased pursuant to the exercise of
each option and the price per share at which such option is exercisable (the
"exercise price") shall be as established by the Plan Administrator; provided,
however, that the maximum number of shares with respect to which an option or
options may be granted to any Optionee in any one fiscal year of the Company
shall not exceed 100,000 shares (the "Maximum Annual Optionee Grant"); however,
the Company may make an additional one-time grant of up to 150,000 shares to
newly hired employees, provided further that the Plan Administrator shall act in
good faith to establish an exercise price which shall be not less than the fair
market value per share of the Common Stock at the time the option is granted
with respect to incentive stock
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options and not less than 85% of the fair market value of the Common Stock at
the time the option is granted with respect to nonqualified stock options, and
not less than the par value per share of the Common Stock at the time the option
is granted with respect to nonqualified stock options and also provided that,
with respect to incentive stock options granted to greater than 10%
shareholders, the exercise price shall be as required by subsection 6.1.
5.2 TERM AND MATURITY
Subject to the restrictions contained in Section 6 with respect to granting
incentive stock options to greater than 10% shareholders, the term of each
incentive stock option shall be as established by the Plan Administrator and, if
not so established, shall be 10 years from the date it is granted but in no
event shall it exceed 10 years. The term of each nonqualified stock option
shall be as established by the Plan Administrator and, if not so established,
shall be 10 years. To ensure that the Company or a related corporation will
achieve the purpose and receive the benefits contemplated by this Plan, any
option granted to any Optionee hereunder shall, unless the condition of this
sentence is waived or modified in the agreement evidencing the option or by
resolution adopted at any time by the Plan Administrator, be exercisable
according to the following schedule:
Period of Optionee's Continuous
Relationship With the Company or
Related Corporation From the Date Portion of Total Option
the Option Is Granted Which Is Exercisable
- ------------------------------------ ---------------------------------------
after one year 25%
after two years 50%
after three years 75%
after four years 100%
5.3 EXERCISE
Subject to the vesting schedule described in subsection 5.2, each option
may be exercised in whole or in part at any time and from time to time;
provided, however, that no fewer than 100 shares (or the remaining shares then
purchasable under the option, if less than 100 shares) may be purchased upon any
exercise of option hereunder and that only whole shares will be issued pursuant
to the exercise of any option and that the exercise price shall not be less than
the par value per share of the Common Stock at the time the option is exercised.
An Option shall be exercised by
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delivery to the Company of notice of the number of shares with respect to which
the option is exercised, together with payment of the exercise price.
5.4 PAYMENT OF EXERCISE PRICE
Payment of the option exercise price shall be made in full at the time the
notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check, or personal check (unless at the time
of exercise the Plan Administrator in a particular case determines not to accept
a personal check) for the shares being purchased.
The Plan Administrator can determine at any time before exercise that
additional forms of payment will be permitted. To the extent permitted by the
Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an Optionee
having a fair market value equal to the exercise price, such fair market value
to be determined in good faith by the Plan Administrator; provided, however,
that payment in stock held by an Optionee shall not be made unless the stock
shall have been owned by the Optionee for a period of at least six months;
(b) delivery of a full-recourse promissory note executed by the Optionee
in an amount which shall not exceed that portion of the exercise price which is
in excess of the amount determined to be stated capital pursuant to the Oregon
Business Corporation Act; provided that (i) such note delivered in connection
with an incentive stock option shall, and such note delivered in connection with
a nonqualified stock option may, in the sole discretion of the Plan
Administrator, bear interest at a rate specified by the Plan Administrator but
in no case less than the rate required to avoid imputation of interest (taking
into account any exceptions to the imputed interest rules) for federal income
tax purposes, (ii) the Plan Administrator in its sole discretion shall specify
the term and other provisions of such note at the time an incentive stock option
is granted or at any time prior to exercise of a nonqualified stock option,
(iii) the Plan Administrator may require that the Optionee pledge to the Company
for the purpose of securing the payment of such note the shares of Common Stock
to be issued to the Optionee upon exercise of the option and may require that
the certificate representing such shares be held in escrow in order to perfect
the Company's security interest, and (iv) the Plan Administrator in its sole
discretion may at any time restrict or rescind this right upon notification to
the Optionee;
(c) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the
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Federal Reserve Board, to promptly deliver to the Company the amount of sale or
loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.
5.5 WITHHOLDING TAX REQUIREMENT
The Company or any related corporation shall have the right to retain and
withhold from any payment of cash or shares of Common Stock under this Plan the
amount of taxes required by any government to be withheld or otherwise deducted
and paid with respect to such payment. At its discretion, the Company may
require an Optionee receiving shares of Common Stock to reimburse the Company
for any such taxes required to be withheld by the Company and withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due or to become due from the Company to the Optionee an amount equal to
such taxes. The Company may also retain and withhold or the Optionee may elect,
subject to approval by the Company at its sole discretion, to have the Company
retain and withhold a number of shares having a market value not less than the
amount of such taxes required to be withheld by the Company to reimburse the
Company for any such taxes and cancel (in whole or in part) any such shares so
withheld. In order to qualify such election for exemption under Rule 16b-3
promulgated under Section 16(b) of the Exchange Act and only to the extent
required by Rule 16b-3, any individual who is subject to Section 16 under the
Exchange Act must exercise the option during the quarterly 10-day window period
required under Section 16(b) of the Exchange Act for exercises of stock
appreciation rights, and the election relating to such option exercise must be
(i) an irrevocable election made six months prior to the date the option
exercise becomes taxable; (ii) an election that is made during a window period;
or (iii) an election that is made prior to a window period, provided the
election becomes effective as of the next window period.
5.6 HOLDING PERIODS
5.6.1 SECURITIES AND EXCHANGE ACT SECTION 16
Shares of Common Stock obtained upon the exercise of a stock option may not
be sold by a person subject to Section 16 of the Exchange Act until six months
after the date the option was granted.
5.6.2 TAXATION OF STOCK OPTIONS
In order to obtain certain tax benefits afforded to incentive stock options
under Section 422 of the Code, an Optionee must hold the shares issued upon the
exercise of an incentive stock option for two years after the date of grant of
the option and one
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year from the date of exercise. An Optionee may be subject to the alternative
minimum tax at the time of exercise of an incentive stock option.
The Plan Administrator may require an Optionee to give the Company prompt
notice of any disposition of shares acquired by the exercise of an incentive
stock option prior to the expiration of such holding periods.
Tax advice should be obtained by an Optionee when exercising any option and
prior to the disposition of the shares issued upon the exercise of any option.
5.7 TRANSFERABILITY OF OPTIONS
Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of any option under this Plan or of any right or privilege
conferred hereby, contrary to the Code or to the provisions of this Plan, or the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. Notwithstanding the foregoing, to the
extent permitted by Rule 16b-3 under the Exchange Act and Section 422 of the
Code, the Plan Administrator may permit an Optionee to (i) during the Optionee's
lifetime, designate a person who may exercise the option after the Optionee's
death by giving written notice of such designation to the Company (such
designation may be changed from time to time by the Optionee by giving written
notice to the Company revoking any earlier designation and making a new
designation) or (ii) transfer the option and the rights and privileges conferred
hereby.
5.8 TERMINATION OF RELATIONSHIP
If the Optionee's relationship with the Company or any related corporation
ceases for any reason other than termination for cause, death or total
disability, and unless by its terms the option sooner terminates or expires,
then the Optionee may exercise, for a twelve-month period, that portion of the
Optionee's option which is exercisable at the time of such cessation, but the
Optionee's option shall terminate at the end of such period following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived in the agreement evidencing the option. If, in
the case of an incentive stock option, an Optionee's relationship with the
Company or any related corporation changes (i.e., from employee to nonemployee,
such as a consultant), such change shall constitute a termination of an
Optionee's employment with the Company or any related
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corporation and the Optionee's incentive stock option shall terminate in
accordance with this subsection 5.8. Upon the expiration of the three-month
period following cessation of employment in the case of an incentive stock
option, or at any time prior to the expiration of the option in the case of a
nonqualified stock option, the Plan Administrator shall have sole discretion in
a particular circumstance to extend the exercise period following such cessation
to any date up to the termination or expiration of the option. If, however, in
the case of an incentive stock option, the Optionee does not exercise the
Optionee's option within three months after cessation of employment, the option
will no longer qualify as an incentive stock option under the Code.
If an Optionee is terminated for cause, each option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime (except minor
violations), fraud, misconduct or disclosure of confidential information. If an
Optionee's relationship with the Company or any related corporation is suspended
pending an investigation of whether or not the Optionee shall be terminated for
cause, the Optionee's rights under each option granted hereunder likewise shall
be suspended during the period of investigation.
If an Optionee's relationship with the Company or any related corporation
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock option, cease to be treated as an
incentive stock option until the end of the 12-month period following such
cessation (unless by its terms it sooner terminates or expires). As used in
this Plan, the term "total disability" refers to a mental or physical impairment
of the Optionee which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Optionee to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Plan Administrator.
Options granted under the Plan shall not be affected by any change of
relationship with the Company so long as the Optionee continues to be an
employee, director, officer, agent, consultant, advisor or independent
contractor of the Company or of a related corporation; however, a change in an
Optionee's status from an employee to a nonemployee (e.g., consultant or
independent contractor) shall result in the termination of an outstanding
incentive stock option held by such Optionee. The Plan Administrator, in its
absolute discretion, may determine all questions of whether
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particular leaves of absence constitute a termination of services; provided,
however, that with respect to incentive stock options, such determination shall
be subject to any requirements contained in the Code. The foregoing
notwithstanding, with respect to incentive stock options, employment shall not
be deemed to continue beyond the first 90 days of such leave, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
As used herein, the term "related corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50% or more of the total combined
voting power of all classes of stock of each of the corporations other than the
Company is owned by one of the other corporations in such chain. When referring
to a parent corporation, the term "related corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
5.9 DEATH OF OPTIONEE
If an Optionee dies while he or she has a relationship with the Company or
any related corporation or within the twelve-month period following cessation of
such relationship, any option held by such Optionee may be exercised in full,
whether or not the vesting requirements set forth in the option agreement have
been satisfied after his or her death by the personal representative of his or
her estate or by the person or persons to whom the Optionee's rights under the
option shall pass (i) by will or by the applicable laws of descent and
distribution or (ii) by a designation or transfer pursuant to Section 5.7.
5.10 NO STATUS AS SHAREHOLDER
Neither the Optionee nor any party to which the Optionee's rights and
privileges under the option may pass shall be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of any option granted under this Plan unless and
until such option has been exercised.
5.11 CONTINUATION OF RELATIONSHIP
Nothing in this Plan or in any option shall confer upon any Optionee any
right to continue in the employ or other relationship of the Company or of a
related corporation, or to interfere in any way with the right of the Company or
of any such
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related corporation to terminate his or her employment or other relationship
with the Company at any time.
5.12 MODIFICATION AND AMENDMENT OF OPTION
Subject to the requirements of Code Section 422 with respect to incentive
stock options and to the terms and conditions and within the limitations of this
Plan, the Plan Administrator may modify or amend any outstanding option granted
under this Plan. The modification or amendment of an outstanding option shall
not, without the consent of the Optionee, impair or diminish any of his or her
rights or any of the obligations of the Company under such option. Except as
otherwise provided in this Plan, no outstanding option shall be terminated
without the consent of the Optionee.
5.13 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS
As to all incentive stock options granted under the terms of this Plan, to
the extent that the aggregate fair market value of the shares (determined at the
time the incentive stock option is granted) with respect to which incentive
stock options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans of the
Company, a related corporation or a predecessor corporation) exceeds $100,000,
such options shall be treated as nonqualified stock options. The previous
sentence shall not apply if the Internal Revenue Service issues a public rule,
issues a private ruling to the Company, any Optionee or any legatee, personal
representative or distributee of an Optionee or issues regulations changing or
eliminating such annual limit.
SECTION 6. GREATER THAN 10% SHAREHOLDERS
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS
If an incentive stock option is granted under this Plan to any employee who
owns more than 10% of the total combined voting power of all classes of stock of
the Company or any related corporation, the term of such incentive stock options
shall not exceed five years and the exercise price shall be not less than 110%
of the fair market value of the shares at the time the incentive stock option is
granted. This provision shall control notwithstanding any contrary terms
contained in an option agreement or any other document.
6.2 ATTRIBUTION RULE
For purposes of subsection 6.1, in determining stock ownership, an employee
shall be deemed to own the shares owned, directly or indirectly, by or for his
or her brothers, sisters, spouse, ancestors and lineal descendants. Shares
owned, directly or
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indirectly, by or for a corporation, partnership, estate or trust shall be
deemed to be owned proportionately by or for its shareholders, partners or
beneficiaries. If an employee or a person related to the employee owns an
unexercised option or warrant to purchase shares of the Company, the shares
subject to that portion of the option or warrant which is unexercised shall not
be counted in determining stock ownership. For purposes of this Section 6,
shares owned by an employee shall include all shares actually issued and
outstanding immediately before the grant of the incentive stock option to the
employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The aggregate number and class of shares for which options may be granted
under this Plan, the Maximum Annual Optionee Grant set forth in Section 5.1, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and 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 like capital adjustment, or the payment of any
stock dividend.
7.1 EFFECT OF LIQUIDATION OR REORGANIZATION
7.1.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK
Except as provided in subsection 7.1.2, upon a merger (other than a merger
of the Company in which the holders of shares of Common Stock immediately prior
to the merger have the same proportionate ownership of shares of Common Stock in
the surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, any option granted hereunder shall terminate, but the Optionee
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise such Optionee's option in whole or in part whether or not the vesting
requirements set forth in the option agreement have been satisfied; provided
that such acceleration will not occur if, in the opinion of the Company's
outside accountants, such acceleration would render unavailable "pooling of
interests" accounting treatment for any reorganization, merger or consolidation
of the Company for which pooling of interests accounting treatment is sought by
the Company.
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7.1.2 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE
If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Company and the corporation
issuing the Exchange Stock, in their sole discretion, determine that any or all
such options granted hereunder shall not be converted into options to purchase
shares of Exchange Stock but instead shall terminate in accordance with the
provisions of subsection 7.1.1. The amount and price of converted options shall
be determined by adjusting the amount and price of the options granted hereunder
in the same proportion as used for determining the number of shares of Exchange
Stock the holders of the shares of Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or reorganization.
Unless accelerated by the Board, the vesting schedule set forth in the option
agreement shall continue to apply to the options granted for the Exchange Stock.
7.2 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL
All Section 7 adjustments shall be made by the Board, and its determination
as to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. Unless an Optionee agrees otherwise, any change or
adjustment to an incentive stock option shall be made in such a manner so as not
to constitute a "modification" as defined in Code Section 425(h) and so as not
to cause his or her incentive stock option issued hereunder to fail to continue
to qualify as an incentive stock option as defined in Code Section 422(b).
SECTION 8. REGISTRATION; CERTIFICATE FOR SHARES
The Company shall be under no obligation to any participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any shares of Common Stock, security or
interest in a
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security paid or issued under, or created by, the Plan. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
SECTION 9. AMENDMENT AND TERMINATION
9.1 BOARD ACTION
The Board may at any time suspend, amend or terminate this Plan, provided
that, to the extent required for compliance with Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act, Section 422 of the Code or by any applicable
law or regulation, the Company's shareholders must approve any amendment which
will:
(a) increase the number of shares that may be issued under this Plan;
(b) with respect to nonqualified stock options, materially modify the
requirements as to eligibility for participation in this Plan or, with respect
to incentive stock options, change the designation of the participants or class
of participants eligible for participation in this Plan;
(c) materially increase the benefits accruing to the participants under
this Plan; or
(d) otherwise require shareholder approval under any applicable law or
regulation.
Such shareholder approval must be obtained (i) within 12 months of the
adoption by the Board of such amendment or (ii) if earlier, and to the extent
required for compliance with Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, at the next annual meeting of shareholders after such adoption by
the Board.
Any amendment made to this Plan which would constitute a "modification" to
incentive stock options outstanding on the date of such amendment, shall not be
applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
9.2 AUTOMATIC TERMINATION
Unless sooner terminated by the Board, this Plan shall terminate ten years
from the earlier of (a) the date on which this Plan is adopted by the Board or
(b) the date on which this Plan is approved by the shareholders of the Company.
No option may be granted after such termination or during any suspension of this
Plan. The amendment
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or termination of this Plan shall not, without the consent of the option holder,
alter or impair any rights or obligations under any option theretofore granted
under this Plan.
SECTION 10. EFFECTIVENESS OF THIS PLAN
This Plan shall become effective upon adoption by the Board so long as it
is approved by the Company's shareholders at any time within 12 months of such
adoption of this Plan or, if earlier, and to the extent required for compliance
with Rule 16b-3 under the Exchange Act, at the next annual meeting of
shareholders after adoption by the Board.
This Plan was adopted by the Board of Directors on September 1, 1990 and
approved by the shareholders on August 21, 1991 and was amended and restated by
the Board of Directors on January 26, 1995 and on July 19, 1995, and approved by
the shareholders on November 1, 1995.
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MORROW SNOWBOARDS, INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
SECTION 1. PURPOSES
The purposes of the Morrow Snowboards, Inc. Stock Option Plan for Non-
Employee Directors (the "Plan") are to attract and retain the services of
experienced and knowledgeable non-employee directors of Morrow Snowboards, Inc.
(the "Corporation") and to provide an incentive for such directors to increase
their proprietary interests in the Corporation's long-term success and progress.
This Plan restates and documents the plan adopted on January 26, 1995, except as
otherwise provided herein for future option grants.
SECTION 2. SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Section 6 hereof, the total number
of shares of the Corporation's common stock (the "Common Stock"), for which
options may be granted under the Plan is 50,000 (the "Shares") on the date this
Plan is adopted by the Board of Directors. The Shares shall be shares presently
authorized but unissued or subsequently acquired by the Corporation and shall
include shares representing the unexercised portion of any option granted under
the Plan, which expires or terminates without being exercised in full. Any
shares issued hereunder shall reduce the number of shares that may be optioned
and/or issued under the Corporation's 1990 Amended and Restated Stock Option
Plan.
SECTION 3. ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator") shall be the Board
of Directors of the Corporation (the "Board"). Subject to the terms of the
Plan, the Plan Administrator shall have the power to construe the provisions of
the Plan, to determine all questions arising thereunder and to adopt and amend
such rules and regulations for the administration of the Plan as it may deem
desirable. No member of the Plan Administrator shall participate in any vote by
the Plan Administrator on any matter materially affecting the rights of any such
member under the Plan.
SECTION 4. PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not otherwise an
employee of the Corporation or any parent or subsidiary corporation (an
"Eligible Director") shall be eligible to participate in the Plan.
Each Eligible Director shall automatically receive the grant of an option
(the "Annual Grant") to purchase 1,000 Shares immediately following each Annual
Meeting of Shareholders as described in the Corporation's Bylaws (the "Annual
Meeting") commencing with the 1996 Annual Meeting. In addition, each Eligible
Director who is initially elected or appointed (other than at the Annual
Meeting) to fill a vacancy on the Board shall automatically receive the grant of
an option (the "Initial Grant") to purchase 1,000 Shares upon such election.
SECTION 5. OPTION TERMS
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
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PA961430.071
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5.1 OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an option
agreement (an "Agreement") duly executed on behalf of the Corporation. Each
Agreement shall comply with and be subject to the terms and conditions of the
Plan. Any Agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Plan Administrator.
5.2 OPTION EXERCISE PRICE
The option exercise price for each option granted under the Plan shall be
the fair market value of the Shares covered by the option at the time the option
is granted. For purposes of the Plan, once the Company's Shares are quoted on
the Nasdaq National Market System, "fair market value" shall be the average of
the high and low sales prices at which the Common Stock was sold on such date as
reported by the Nasdaq National Market System on such date or, if no Common
Stock was traded on such date, on the next preceding date on which Common Stock
was so traded.
5.3 VESTING AND EXERCISABILITY
Annual Grants and Initial Grants to an Eligible Director shall vest and be
fully exercisable six months after the date of grant. Note: the effect of an
exercise for any reason prior to six months after the grant would deem the grant
to be nonexempt under Section 16 of the Exchange Act (as defined below). See
Section 5.7 hereof.
5.4 TIME AND MANNER OF EXERCISE OF OPTION
Each option may be exercised in whole or in part at any time and from time
to time; provided, however, that no fewer than 100 Shares (or the remaining
Shares then purchasable under the option, if less than 100 Shares) may be
purchased upon any exercise of option rights hereunder and, for all such options
that only whole Shares will be issued pursuant to the exercise of any option.
Any option may be exercised by giving written notice, signed by the person
exercising the option, to the Corporation stating the number of Shares with
respect to which the option is being exercised, accompanied by payment in full
for such Shares, which payment may be in whole or in part (i) in cash or by
check, (ii) in shares of Common Stock already owned for at least six months by
the person exercising the option, valued at fair market value at the time of
such exercise, or (iii) by delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker, to properly deliver to the
corporation the amount of sale or loan proceeds to pay the exercise price, all
in accordance with the regulations of the Federal Reserve Board.
5.5 TERM OF OPTIONS
Each option shall expire ten years from the date of the granting thereof,
but shall be subject to earlier termination as follows:
(a) In the event that an optionee ceases to be a director of the
Corporation for any reason other than the death or total disability of the
optionee, the vested portion of the options granted to such optionee may be
exercised by him or her only within three months after the date such
optionee ceases to be a director of the Corporation.
(b) In the event of the death of an optionee, whether during the
optionee's service as a director or during the one-month period referred to
in Section 5.5(a), the vested portion of the options granted to such
optionee shall be exercisable, and such options shall expire (unless by its
terms it sooner terminates and expires) unless exercised within one year
after the date of the optionee's death,
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PA961430.071
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by the legal representatives or the estate of such optionee, by any person
or persons whom the optionee shall have designated in writing on forms
prescribed by and filed with the Corporation or, if no such designation has
been made, by the person or persons to whom the optionee's rights have
passed by will or the laws of descent and distribution.
(c) In the event that an optionee suffers a total disability during
the optionee's service as a director, the options granted to such optionee
shall expire unless exercised within one year of the optionee's cessation
of service as a director (unless by its terms it sooner terminates and
expires). As used in this Plan, the term "total disability" refers to a
mental or physical impairment of the optionee which is expected to result
in death or which has lasted or is expected to last for a continuous period
of 12 months or more and which causes the optionee to be unable, in the
opinion of the Company and two independent physicians, to perform his or
her duties for the Company. Total disability shall be deemed to have
occurred on the first day after the Company and the independent physicians
have furnished their opinion of total disability to the Plan Administrator.
5.6 TRANSFERABILITY
During an optionee's lifetime, an option may be exercised only by the
optionee. Options granted under the Plan and the rights and privileges
conferred thereby shall not be subject to execution, attachment or similar
process and may not be transferred, assigned, pledged or hypothecated in any
manner (whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution except that, to the extent permitted
by applicable law and Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Plan
Administrator may permit a recipient of an option to designate in writing during
the optionee's lifetime a beneficiary to receive and exercise options in the
event of the optionee's death (as provided in Section 5.5(b)). Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any option under
the Plan or of any right or privilege conferred thereby, contrary to the
provisions of the Plan, or the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, shall be null and void.
5.7 HOLDING PERIOD
If an optionee subject to Section 16 of the Exchange Act sells shares of
Common Stock obtained upon the exercise of any option granted under the Plan
within six months after the date the option was granted, such sale may result in
short-swing profit recovery under Section 16(b) of the Exchange Act.
5.8 PARTICIPANT'S OR SUCCESSOR'S RIGHTS AS SHAREHOLDER
Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a shareholder of the
Corporation with respect to any Shares subject to an option granted to such
person until such person becomes a holder of record of such Shares.
5.9 LIMITATION AS TO DIRECTORSHIP
Neither the Plan, nor the granting of an option, nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.
5.10 REGULATORY APPROVAL AND COMPLIANCE
The Corporation shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, without obtaining to the complete satisfaction of the
Plan
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PA961430.071
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Administrator the approval of all regulatory bodies deemed necessary by the Plan
Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.
SECTION 6. CAPITAL ADJUSTMENTS
The aggregate number of Shares with respect to which options may be granted
under the Plan, as provided in Section 2, the number of Shares subject to each
outstanding option and the price per share specified in such options, shall all
be proportionately adjusted for any increase or decrease in the number of issued
shares of common stock of the Corporation resulting from a subdivision or
consolidation of shares or any other similar capital adjustment, the payment of
a stock dividend or a merger or consolidation of, the Corporation, or the sale
of all or substantially all of the assets of, or the liquidation of, the
Corporation, including without limitation, the stock split adopted by the Board
on September 22, 1995, as amended, should such stock split become effective.
Upon the effective date of a dissolution or liquidation of the Corporation,
or of a reorganization, merger or consolidation of the Corporation with one or
more corporations which results in more than eighty percent of the outstanding
voting shares of the Corporation being owned by one or more affiliated
corporations or other affiliated entities, or of a transfer of all or
substantially all the assets or more than eighty percent of the then outstanding
shares of the Corporation to another corporation or other entity, this Plan and
all options granted hereunder shall terminate. In the event of such
dissolution, liquidation, reorganization, merger, consolidation, transfer of
assets or transfer of stock, each Optionee shall be entitled, for a period of
twenty days prior to the effective date of any such transaction, to purchase the
full number of Shares under his or her option which he or she otherwise would
have been entitled to purchase during the remaining term of such option.
Adjustments under this Section 6 shall be made by the Plan Administrator,
whose determination shall be final. No fractional Shares shall be issued under
the Plan or pursuant to any adjustment hereunder.
SECTION 7. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Corporation; none of such expenses shall be charged to any
optionee.
SECTION 8. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective upon adoption by the Corporation's
shareholders. The Plan shall continue in effect until it is terminated by
action of the Board or the Corporation's shareholders, but such termination
shall not affect the then-outstanding terms of any options.
SECTION 9. TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that if required to qualify the Plan
under Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, no
amendment may be made more than once every six months that would change the
amount, price, timing or vesting of the options, other than to comport with
changes in the Internal Revenue Code of 1986, as amended, or the rules and
regulations promulgated thereunder; and provided, further, that if required to
qualify the Plan under Rule 16b-3, no amendment that would
(a) materially increase the number of Shares that may be issued under
the Plan,
(b) materially modify the requirements as to eligibility for
participation in the Plan, or
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(c) otherwise materially increase the benefits accruing to
participants under the Plan
shall be made without the approval of the Corporation's shareholders.
SECTION 10. COMPLIANCE WITH RULE 16b-3
It is the intention of the Corporation that the Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Exchange Act and that
Plan participants remain disinterested persons ("disinterested persons") for
purposes of administering other employee benefit plans of the Corporation and
having such other plans be exempt from Section 16(b) of the Exchange Act.
Therefore, if any Plan provision is later found not to be in compliance with
Rule 16b-3 or if any Plan provision would disqualify Plan participants from
remaining disinterested persons, that provision shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
Adopted by the Corporation's Board of Directors on September 22, 1995 and
approved by the Corporation's shareholders on November 1, 1995.
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