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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 30, 1999
MORROW SNOWBOARDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OREGON 0-27002 93-1011046
(STATE OR OTHER JURISDICTION OF (COMMISSION (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NUMBER)
2600 PRINGLE ROAD, S.E.
SALEM, OR 97302
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(503) 375-9300
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
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ITEM 1. CHANGE IN CONTROL
COMMON STOCK SALES. On September 30, l999, Capitol Bay Management, Inc.
("CBM") completed the exercise of its option to acquire 1,000,000 shares of
Morrow Snowboards, Inc. (the "Company" or "Morrow") Common Stock for $250,000
(at a purchase price of $.25 per share) and on October 9, l999, CBM
exercised its right to convert $500,000 of the Company's credit facility to
2,000,000 shares of the Company's Common Stock, all at $.25 per share.
Following such transactions, the Company will have outstanding 9,176,556
shares of its voting Common Stock. Following such purchases, CBM holds
3,000,000 shares of the Company's common stock (32.69% of the Company's
outstanding voting securities) and an affiliate, Capitol Bay Securities, Inc.
("CBS") holds 232,900 shares (2.54% of the Company's outstanding voting
securities), collectively, 3,232,900 shares constituting 35.23% of the
Company's outstanding voting securities. As reported on Schedule 13D and
amendments thereto filed by CBM, CBS, Capitol Bay Group, Inc. ("CBG") and
Stephen C. Kircher, CBM and CBS are wholly-owned subsidiaries of CBG and
Stephen C. Kircher holds a majority interest in CBG (collectively, the
"Reporting Persons"). Mr. Kircher and CBG are each the beneficial owner of
such 3,232,900 shares of the Company's Common Stock. See Schedule 13D filed
with the SEC on July 19, l999, as amended on October 12, l999, regarding
their beneficial ownership of the Company's securities. The mailing address
for CBM, CBS, CBG and Steve Kircher is 2424 Professional Drive, Roseville,
California 95661. The shares of the Company's Common Stock held by the
Reporting Persons, if voted together may have sufficient voting power to
approve matters submitted to the Company's shareholders for approval,
including the election of the Company's Board of Directors.
The information contained herein is based on the Schedule 13-D filed by
CBM, CBS and Steve Kircher on July 19, 1999, as amended October 12, l999. In
such initial Schedule 13-D, the Reporting Persons noted that the shares were
acquired for investment purposes in the ordinary course of business. In the
Schedule 13-D, as amended on October 12, l999, the Reporting Persons stated
that CBM is currently negotiating (i) with potential candidates to merge into
Morrow or a subsidiary thereof; (ii) for the infusion of additional capital
in an attempt to maintain the financial stability of Morrow: and/or (iii) a
transaction utilizing the status of Morrow as a public company. Any or all of
the foregoing may result in an extraordinary transaction. Further, it is
likely that if any of the foregoing are negotiated on behalf of Morrow that
Morrow will issue additional shares of capital stock, amend its articles of
incorporation, effect a further change in the Morrow Board of Directors and
management and/or change its business plan, any or all of which would likely
create a material change in the business or corporate structure of Morrow.
Most of such actions will require shareholder approval. Generally, under
Oregon law, any action requiring shareholder approval would have to be
approved at a meeting at which a quorum is present (a majority of the voting
shares outstanding) and be approved by a majority of the shares represented
(in person or by proxy) and voting at such meeting. Directors are normally
elected by a plurality of the shares represented (in person or by proxy) and
voting at the shareholder meeting for the director position to be filled.
Depending on the nature of the transaction dissenters rights may or may not
apply.
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The stock issuances described above and/or change in the Board of
Directors discussed below may have resulted in a change in control of Morrow
and give the Reporting Persons sufficient voting power to approve any action
requiring shareholder approval and any election of directors by the
shareholders, as well as other corporate action.
DIRECTORS. Effective October 12, l999, Erik Krieger and Maurice Bickert
resigned as directors. Following such resignations, the Board size was set at
five and three new directors were added to the Board: Stephen C. Kircher,
William H. Hedden and Thomas J. Manz with P. Blair Mullin and Ray E. Morrow,
Jr. continuing as directors. Stephen C. Kircher is one of the Reporting
Persons described above. Mr. Kircher recommended Messrs. Hedden and Manz for
Morrow's Board of Directors. The proposed new directors were reviewed and
recommended for inclusion on the Board by a Nominating Committee of directors
from the prior Board. The following information is provided regarding the new
directors. To the Company's knowledge, neither Mr. Hedden nor Mr. Manz has
any interest in or holds any position with any of the Reporting Persons. Each
of Mr. Hedden and Mr. Manz have a pre-existing personal relationship and
prior or existing contacts with Mr. Kircher in other business contexts.
William H. Hedden (age 45) from 1992 to present, has served as President
& CEO of Consolidated Adjusting Inc. (construction insurance adjusting). From
1985 to 1992, Mr. Hedden served as a Director of Burlingame Bancorp and its
subsidiary, Burlingame Bank & Trust Co. From 1984-1985, Mr. Hedden served as
Chairman of the Board of Bayhill Service Corporation, a mortgage banking
subsidiary of Delta Federal Savings & Loan. From 1983 to 1987, Mr. Hedden
served as Chairman of the Board and majority shareholder of Delta Federal
Savings & Loan. Mr. Hedden has a Juris Doctor degree from Hastings College of
the Law, San Francisco (1979), and a BA degree from Stanford University, Palo
Alto, California (1975).
Stephen C. Kircher (age 41) since l993 has served as President & Chief
Executive Officer and is majority owner of Capitol Bay Group, Inc. (holding
company), and as President & Chief Executive Officer of Capitol Bay
Securities, Inc. (securities and investment banking), and Capitol Bay
Management, Inc. (investment company), both Capitol Bay Securities, Inc. and
Capitol Bay Management, Inc. being wholly-owned subsidiaries of Capitol Bay
Group, Inc. Prior to 1993, Mr. Kircher formed and managed Spinner
Corporation, which engaged in leveraged buyouts of troubled companies. Mr.
Kircher has extensive experience as a principal in equity private placements,
sale and leaseback financing, multiple forms of debt financing, and initial
public offerings. Mr. Kircher began his career with Dean Witter in 1975
before joining Bateman, Eichler, Hill & Richards, a regional investment
banking firm in 1978. Mr. Kircher has a BA degree from the University of
California, San Diego.
Thomas J. Manz (age 50) since l993 has been owner of TJM Enterprises, a
real estate development, brokerage and financial services sole
proprietorship. From 1984 to 1993, Mr. Manz was responsible for the
renovation, expansion and management of Southgate Shopping Center, a 439,000
square-foot shopping center in Sacramento, California, as well as several
other ventures in the real estate industry including property management,
construction, real estate sales, and commercial landscaping. Mr. Manz is
presently Chairman of the Board of Roseville First National Bank and has
served as a Director of that bank since 1991. Mr. Manz has also served as a
Director of Pacific Coast Bankers Bank since 1997. Mr. Manz received a
Bachelor of Science degree from Iowa State University in 1971.
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ITEM 5. OTHER EVENTS.
The Board of Directors on October 12, l999 adopted the Morrow
Snowboards, Inc. 1999 Stock Option Plan for Non-Employee Directors (the
"Plan"). The Plan provides for the issuance of up to 300,000 shares of the
Company's Common Stock (as presently constituted) to existing directors and,
in the case of extra service or duties, to prior directors. Options may be
awarded in such amounts, at such times, at such exercise prices and on such
other terms as the Board of Directors determines, subject to any limitations
in the Plan. Unless otherwise designated, options vest uniformly over the
year following the date of grant. The options, subject to earlier termination
under the Plan or option grant, expire after the later of (i) 5 years after
the date of grant or (ii) five years after termination as a director. The
Board issued fully-vested options for 100,000 shares to six persons who were
directors over the past year, all at an exercise price of $0.25 per share.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
EXHIBITS. The following exhibits are included with this filing:
1. Morrow Snowboards, Inc. l999 Stock Option Plan for Non-Employee
Directors
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Salem, State of Oregon, on October 15, 1999.
MORROW SNOWBOARDS, INC.
By: /s/ P. BLAIR MULLIN
-------------------------------------
P. Blair Mullin
PRESIDENT AND CHIEF FINANCIAL OFFICER
(PRINCIPAL EXECUTIVE, FINANCIAL
AND ACCOUNTING OFFICER
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Description
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<S> <C>
99.6 Morrow Snowboards, Inc. l999 Stock Option Plan for
Non-Employee Directors
</TABLE>
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MORROW SNOWBOARDS, INC.
1999 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
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MORROW SNOWBOARDS, INC.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
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Page
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ARTICLE I - GENERAL 1
1.1 DEFINITION 1
1.2 NATURE OF OPTIONS 1
ARTICLE II - OPTIONS 1
2.1 PARTICIPATION 1
2.2 GRANT 2
2.3 TERMS 2
ARTICLE III - AUTHORIZED STOCK 4
3.1 THE STOCK 4
3.2 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. 4
3.3 ADJUSTMENTS FOR CERTAIN DISTRIBUTIONS OF PROPERTY 5
3.4 DISTRIBUTIONS OF CAPITAL STOCK AND INDEBTEDNESS 5
3.5 NO RIGHTS AS SHAREHOLDER 5
3.6 FRACTIONAL SHARES 5
ARTICLE IV - CORPORATE REORGANIZATION: CHANGE OF CONTROL 5
4.1 REORGANIZATION 5
4.2 REQUIRED NOTICE 6
4.3 ACCELERATION OF EXERCISABILITY 6
4.4 CHANGE OF CONTROL 6
4.5 LIMITATION ON ACCELERATION OF EXERCISE 6
4.6 DISSOLUTION 7
ARTICLE V - GENERAL PROVISIONS 7
5.1 EXPIRATION 7
5.2 AMENDMENTS, ETC. 7
5.3 TREATMENT OF PROCEEDS 7
5.4 EFFECTIVENESS 7
5.5 FAIR MARKET VALUE 7
5.6 SECTION HEADINGS 7
5.7 SEVERABILITY 8
5.8 RULE 16b-3 8
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MORROW SNOWBOARDS, INC.
1999 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
The Board of Directors (the "Board") of Morrow Snowboards, Inc., an
Oregon corporation (the "Company"), hereby establishes the Morrow Snowboards,
Inc. 1999 Stock Option Plan for Non-Employee Directors (the "Plan"),
effective October 12, 1999 (the "Effective Date").
PURPOSES
The purposes of the Plan are to provide to certain directors of the
Company, who are not also employees of the Company added incentive to
continue in the service of the Company and a more direct interest in the
future success of the operations of the Company by granting to such directors
options ("Options") to purchase shares of the common stock (the "Stock") of
the Company upon the terms and conditions described below. An additional
purpose of the Plan is to reward former Directors for service and time spent
beyond that rewarded by normal director fees and stock option grants under
prior stock option plans by granting such directors stock options.
ARTICLE I - GENERAL
1.1 DEFINITION. For purposes of the Plan and as used herein, a
"non-employee director" is an individual who (a) is or was a member of the Board
and (b) is not an employee of the Company. For purposes of the Plan, an employee
is an individual whose wages are subject to the withholding of federal income
tax under section 3401 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"). A non-employee director or former director
(hereafter, "director" or "non-employee director") to whom an Option is granted
is referred to herein as a "Holder."
1.2 NATURE OF OPTIONS. The Options granted hereunder shall be options
that do not satisfy the requirements of section 422 of the Code.
ARTICLE II - OPTIONS
2.1 PARTICIPATION. Each non-employee director on the Effective Date and
each non-employee director elected thereafter shall be eligible to receive
Options to purchase Stock in accordance with Section 2.2 on the terms and
conditions herein described.
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2.2 GRANT
(a) Grant. The Board, in its sole discretion, may grant Options to
individual non-employee directors. The Board shall have full discretion as to
the number and date of the grant of Options and may grant Options covering
different numbers of shares of Stock to different directors.
(b) Date of Grant. The date on which a non-employee director receives
an Option hereunder is referred to as the date of grant of such Option.
(c) Option Certificates. Each Option granted under the Plan shall be
evidenced by a written stock option certificate (an "Option Certificate") issued
in the name of the non-employee director to whom the Option is granted. The
Option Certificate shall incorporate and conform to the terms and conditions set
forth herein.
2.3 TERMS. Options issued pursuant to the Plan shall have the following
terms and conditions in addition to those set forth elsewhere herein:
(a) NUMBER. Each non-employee director shall receive under the Plan
Options to purchase the number of shares of Stock determined by the Board,
subject to adjustment as provided in Article III. Such grants shall be effective
at the times specified in Section 2.2.
(b) PRICE. The price at which each share of Stock covered by the
Option may be purchased by each non-employee director shall be the Fair Market
Value (as defined in Section 5.5) of the Stock on the date of grant, subject to
adjustment as provided in Article III.
(c) DURATION OF OPTIONS. The period within which each Option may be
exercised shall expire ten years from the date the Option is granted (the
"Option Period"), unless terminated earlier pursuant to subsection (d) below or
fully exercised prior to the end of such period; provided, in all events, the
option, subject to earlier termination under subsection (d), shall terminate on
the later of five (5) years from the date of grant or five years from
termination of service as a director of the Company.
(d) TERMINATION OF SERVICE, DEATH, ETC. The Option shall terminate in
the following circumstances:
(i) If the Holder (if a director at the time of grant) is
removed as a director of the Company during the Option Period for cause, the
Option shall be void thereafter for all purposes.
(ii) If the Holder (if a director at the time of grant) ceases
to be a director of the Company on account of disability within the meaning of
Section 22(e)(3) of the Code, the Option may be exercised by the Holder (or, in
case of death thereafter, by the persons specified in Section 2.3(d)(iii))
within one year following the date on which the Holder ceased to be a
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director (if otherwise within the Option Period), but not thereafter. In any
such case, the Option may be exercised as to all shares of Stock specified
therein, notwithstanding Section 2.3(g).
(iii) If the Holder dies during the Option Period, the Option
may be exercised by those entitled to do so under the Holder's will or by the
laws of descent and distribution within one year following the Holder's death
(if otherwise within the Option Period), but not thereafter. In any such case,
the Option may be exercised as to all shares of Stock specified therein,
notwithstanding Section 2.3(g).
(iv) If the Holder (if a director at the time of grant)
ceases to be a director within the Option Period for any reason other than
removal for cause, disability or death, the Option may be exercised by the
Holder within five years following the date of such termination (if otherwise
within the Option Period), but not thereafter. In any such case, the Option may
be exercised only as to the shares as to which the Option had become exercisable
on or before the date the Holder ceased to be a director.
(e) TRANSFERABILITY, EXERCISABILITY. Each Option granted under the
Plan shall not be transferable by a Holder other than by will or the laws of
descent and distribution and shall be exercisable during the Holder's lifetime
only by the Holder or, in the event of disability or incapacity, by the Holder's
guardian or legal representative. Notwithstanding any other provision of the
Plan, no Option may be exercised unless and until the Plan is approved by the
shareholders of the Company in accordance with Section 5.4.
(f) EXERCISE, PAYMENTS, ETC.
(i) The method for exercising each Option granted shall be by
delivery to the Company of written notice specifying the number of shares with
respect to which the Option is exercised. The purchase of Stock pursuant to the
Option shall take place at the principal office of the Company within thirty
days following delivery of such notice, at which time the purchase price of the
Stock shall be paid in full by any of the methods set forth in Section
2.3(f)(ii) or a combination thereof. If the purchase price is paid by means of a
broker's loan transaction as described in clause (C) of Section 2.3(f)(ii), in
whole or in part, the closing of the purchase of the Stock under the Option
shall take place on the date on which, and only if, the sale of Stock upon which
the broker's loan was based has been closed and settled, unless the Holder makes
an irrevocable written election, at the time of exercise of the Option, to have
the exercise treated as fully effective for all purposes upon receipt of the
purchase price by the Company regardless of whether or not the sale of the Stock
by the broker is closed and settled. A properly executed certificate or
certificates representing the Stock shall be delivered to the Holder upon
payment therefor. If Options on less than all shares evidenced by an Option
Certificate are exercised, the Company shall deliver a new Option Certificate
evidencing the Option on the remaining shares on delivery of the outstanding
Option Certificate for the Option being exercised.
(ii) The exercise price shall be paid by any of the following
methods or any combination of such methods, at the option of the Holder: (A)
cash; (B) certified, cashier's or other check acceptable to the Company, payable
to the order of the Company; or (C) delivery
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to the Company of irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds required to pay the purchase
price of the Stock; or (D) delivery to the Company of certificates
representing the number of shares of Stock then owned by the Holder, the Fair
Market Value of which (determined as of the date the notice of exercise is
delivered to the Company) equals the price of the Stock to be purchased
pursuant to the Option, properly endorsed for transfer to the Company. No
Option may be exercised by delivery to the Company of certificates
representing Stock that has been held by the Option Holder for less than six
months or such other period as shall be sufficient for the Company to avoid,
if possible, the recognition of expense with respect to the Option for
accounting purposes.
(g) SERVICE REQUIRED FOR EXERCISE. Except as set forth in Sections
2.3(d), 4.3, 4.4 and 5.4 or otherwise provided in the Option grant, each Option
shall become exercisable in increments after each month of continuous service by
the Holder as a non-employee director of the Company commencing with the first
month of continuous service from the date of grant. The number of shares as to
all or part of which the Option may be exercised after one month of continuous
service as a non-employee director after the date of grant shall be 1/12 of the
total number of shares covered by the Option, with an additional 1/12 being
exercisable after each additional month of continuous service as a non-employee
director through the 12th month of continuous service. Except as set forth in
Sections 2.3(d), 4.3 and 4.4, the Option shall not be exercisable as to any
shares as to which the continuous service requirement has not been satisfied,
regardless of the circumstances under which the Holder ceased to be a director.
The number of shares as to which the Option may be exercised shall be
cumulative, so that once the Option becomes exercisable as to any shares it
shall continue to be exercisable as to those shares until expiration or
termination of the Option as provided in the Plan. Notwithstanding the
foregoing, the Board of Directors, in situations it deems warranted, may with
the optionee's consent cancel any existing outstanding Option and reissue a new
Option hereunder for an equivalent number of shares with vesting equal to the
vesting in the original Option.
ARTICLE III - AUTHORIZED STOCK
3.1 THE STOCK. The total number of shares of Stock as to which Options
may be granted pursuant to the Plan shall be 300,000 in the aggregate. The
number of shares of Stock authorized for grant hereunder shall be adjusted in
accordance with the provisions of Section 3.2. Shares of Stock underlying
expired or canceled and unexercised Options shall again be available for grant
under the Plan. The Company shall at all times reserve a sufficient number of
shares of Stock, or otherwise assure itself of its ability to perform its
obligations hereunder.
3.2 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If the Company
shall at any time increase or decrease the number of its outstanding Shares by
means of payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, or change
in any way the rights and privileges of such Shares, then the numbers, rights
and privileges of the following shall be increased, decreased or changed in like
manner as if the corresponding Shares had been issued and outstanding, fully
paid and nonassessable at the time of such occurrence: (a) the Shares as to
which Options may be granted under the Plan; and (b) the Shares then subject to
each outstanding Option. Upon any occurrence
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described in this Section 3.2, the total Option Price under each then
outstanding Option shall remain unchanged but shall be apportioned ratably
over the increased or decreased number of Shares subject to the Option.
3.3 ADJUSTMENTS FOR CERTAIN DISTRIBUTIONS OF PROPERTY. If the Company
shall at any time distribute with respect to its Stock assets or securities of
other persons (excluding cash dividends or distributions payable out of capital
surplus and dividends or other distributions referred to in Sections 3.2 or
3.4), then the Option Price of outstanding Options shall be adjusted to reflect
the fair market value of the assets or securities distributed, the Company shall
provide for the delivery upon exercise of such Options of cash in an amount
equal to the fair market value of the assets or securities distributed or a
combination of such actions shall be taken, all as determined by the Committee
in its discretion. Fair market value of the assets or securities distributed for
this purpose shall be as determined by the Committee.
3.4 DISTRIBUTIONS OF CAPITAL STOCK AND INDEBTEDNESS. If the Company shall
at any time distribute with respect to its Stock shares of its capital stock
(other than Stock) or evidences of indebtedness, then a proportionate part of
such capital stock and evidences of indebtedness shall be set aside for each
outstanding Option and, upon the exercise of such Option, delivered to the
Option Holder.
3.5 NO RIGHTS AS SHAREHOLDER. An Option Holder shall have none of the
rights of a shareholder with respect to the Shares subject to an Option until
such Shares are transferred to the Option Holder upon the exercise of such
Option. Except as provided in this Article III, no adjustment shall be made for
dividends, rights or other property distributed to shareholders (whether
ordinary or extraordinary) for which the record date is prior to the date such
Shares are so transferred.
3.6 FRACTIONAL SHARES. No adjustment or substitution provided for in this
Article III shall require the Company to issue a fractional share. The total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share.
ARTICLE IV - CORPORATE REORGANIZATION: CHANGE OF CONTROL
4.1 REORGANIZATION. Upon the occurrence of any of the following events, if
the notice required by Section 4.2 shall have first been given, the Plan and all
Options then outstanding hereunder shall automatically terminate and be of no
further force and effect whatsoever, without the necessity for any additional
notice or other action by the Board or the Company: (a) the merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of outstanding shares of
Stock); or (b) the sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company); or (c)
the dissolution or liquidation of the Company.
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4.2 REQUIRED NOTICE. At least 30 days' prior written notice of any
event described in Section 4.1 shall be given by the Company to each Holder,
unless in the case of the events described in clauses (a) or (b) of Section
4.1, the Company, or the successor or purchaser, as the case may be, shall
make adequate provision for the assumption of the outstanding Options or the
substitution of new options for the outstanding Options on terms comparable
to the outstanding Options except that the Holder of each Option then
outstanding shall have the right thereafter to purchase the kind and amount
of shares of stock or other securities or property or cash receivable upon
such merger, consolidation, sale or conveyance by a holder of the number of
shares of Stock that would have been receivable upon exercise of the Option
immediately prior to such merger, consolidation, sale or conveyance (assuming
such holder of Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a majority of the
non-electing shares). The provisions of this Article IV shall similarly apply
to successive mergers, consolidations, sales or conveyances. Such notice
shall be deemed to have been given when delivered personally to a Holder or
when mailed to a Holder by registered or certified mail, postage prepaid, at
such Holder's address last known to the Company.
4.3 ACCELERATION OF EXERCISABILITY. Subject to Section 5.4, Holders
notified in accordance with Section 4.2 may exercise their Options at any
time before the occurrence of the event requiring the giving of notice (but
subject to occurrence of such event), regardless of whether all conditions of
exercise relating to length of service as a director have been satisfied.
4.4 CHANGE OF CONTROL. If a Change in Control (as defined below)
occurs, all Options shall become exercisable in full, regardless of whether
all conditions of exercise relating to continuous service have been
satisfied. A "Change in Control" is deemed to have occurred if (a) a person
(as such term is used in Section 13(d) of the Securities Exchange Act of 1934
(the "Exchange Act")) becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of shares of the Company or the Company's successor
having 30% or more of the total number of votes that may be cast for the
election of directors of the Company without the prior approval of at least a
majority of the members of the Board unaffiliated with such person (unless
such person beneficially owns shares with at least 15% of such votes on the
Effective Date), or (b) individuals who constitute the directors of the
Company at the beginning of a 24-month period cease to constitute at least
two-thirds of all directors at any time during such period, unless the
election of any new or replacement directors was approved by a vote of at
least a majority of the members of the Board in office immediately prior to
such period and of the new and replacement directors so approved.
Notwithstanding anything to the contrary in this Section 4.4, no Option will
become exercisable by virtue of the occurrence of a Change in Control if the
Holder of that Option or any group of which that Holder is a member is the
person whose acquisition constituted the Change in Control.
4.5 LIMITATION ON ACCELERATION OF EXERCISE. Notwithstanding anything
contained in this Plan, if the acceleration of exercise of an option, in the
opinion of the Company's outside accountants would render unavailable
"pooling of interest" accounting treatment for any reorganization, merger or
consolidation of the Company for which pooling of interest accounting
treatment is sought, such acceleration will not occur.
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4.6 DISSOLUTION. Notwithstanding anything contained herein, an Option to
the extent not previously exercised shall expire on the 30th day after the
adoption of a plan of complete dissolution by the Company or, if required, the
date of shareholder approval of such plan.
ARTICLE V - GENERAL PROVISIONS
5.1 EXPIRATION. The Plan shall terminate whenever the Board adopts a
resolution to that effect. After termination, no additional Options shall be
granted under the Plan, but the Company shall continue to recognize Options
previously granted.
5.2 AMENDMENTS, ETC. The Board may from time to time amend, modify,
suspend or terminate the Plan. Nevertheless, no such amendment, modification,
suspension or termination shall impair any Option theretofore granted under
the Plan or deprive any Holder of any shares of Stock that he may have
acquired through or as a result of the Plan without the consent of the
Holder. The Company shall obtain the approval of shareholders to any
amendment or modification of the Plan to the extent required by Rule 16b-3
under the Exchange Act ("Rule 16b-3") (or any successor applicable rule) or
by the listing requirements of the National Association of Securities
Dealers, Inc. or any stock exchange on which the Company's securities are
quoted or listed for trading.
5.3 TREATMENT OF PROCEEDS. Proceeds from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.
5.4 EFFECTIVENESS. This Plan shall be effective on the Effective Date.
5.5 FAIR MARKET VALUE. The "Fair Market Value" of a share of Stock shall
be the last reported sale price of the Stock on the NASDAQ National Market
System on the day the determination is to be made, or if no sale took place on
such day, the average of the closing bid and asked prices of the Stock on the
NASDAQ National Market System on such day, or if the market is closed on such
day, the last day prior to the date of determination on which the market was
open for the transaction of business, as reported by NASDAQ. If, however, the
Stock should be listed or admitted for trading on a national securities
exchange, the Fair Market Value of a share of the Stock shall be the last sales
price, or if no sales took place, the average of the closing bid and asked
prices on the day the determination is to be made, or if the market is closed on
such day, the last day prior to the date of determination on which the market
was open for the transaction of business, as reported in the principal
consolidated transaction reporting system for the principal national securities
exchange on which the Stock is listed or admitted for trading. If the Stock is
not listed or traded on NASDAQ or on any national securities exchange, the Fair
Market Value for purposes of the grant of Options under the Plan shall be
determined by the Board in good faith in its sole discretion.
5.6 SECTION HEADINGS. The Section headings are included herein only for
convenience, and they shall have no effect on the interpretation of the Plan.
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5.7 SEVERABILITY. If any article, section, subsection or specific
provision is found to be illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if such illegal and invalid provision had
never been set forth in the Plan.
5.8 RULE 16b-3. This Plan is intended to comply with the requirements of
Rule 16b-3 and any successor applicable rule so that grants under the Plan will
not affect the status of non-employee directors as disinterested persons for
purposes of Rule 16b-3 and that such grants will otherwise satisfy the
requirements of Rule 16b-3. To the extent the Plan does not conform to such
requirements, it shall be deemed amended to so conform without any further
action on the part of the Board of Directors or shareholders.
Adopted as of October 12, l999.
MORROW SNOWBOARDS, INC.
By: /s/ Blair Mullin
---------------------------------
Chief Executive Officer
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