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SECURITIES AND EXCHANGE COMMISSION REGISTRATION
WASHINGTON, D.C. 20549 NO.__________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________________________
EARL SCHEIB, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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<S> <C>
DELAWARE 95-1759002
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8737 WILSHIRE BOULEVARD, BEVERLY HILLS, CALIFORNIA 90211
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
__________________________________________
EARL SCHEIB, INC.
1994 BOARD OF DIRECTORS STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
DAVID I. SUNKIN
VICE PRESIDENT AND GENERAL COUNSEL
8737 WILSHIRE BOULEVARD, BEVERLY HILLS, CALIFORNIA 90211
310-652-4880
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
__________________________________________
COPY TO:
MARK A. BONENFANT
BUCHALTER, NEMER, FIELDS & YOUNGER,
A PROFESSIONAL CORPORATION
601 SOUTH FIGUEROA STREET, SUITE 2400
LOS ANGELES, CALIFORNIA 90017
(213) 891-0700
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED UNIT(1) AGGREGATE OFFERING PRICE REGISTRATION FEE
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Common Stock, par value $1.00 50,000 shares(2) $8.3125 $415,625 $144
===================================================================================================================================
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) based upon the average of the high and low prices reported
in the Consolidated Reporting System on September 19, 1996.
(2) These shares are registered in addition to the 100,000 shares registered
pursuant to the Registration Statement on Form S-8 (No. 33-87130).
<PAGE> 2
PART I--INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
The Board of Directors (the "Board") and Shareholders of Earl Scheib,
Inc., (the "Company") have adopted the Earl Scheib, Inc. 1994 Board of
Directors Stock Option Plan (the "1994 Option Plan") which provides for the
continuous participation non-employee directors of the Company. The Company
previously filed a Registration Statement on Form S-8 (No. 33-87130) which was
declared effective on December 9, 1994 by the Securities and Exchange
Commission (the "Exchange") registering the original shares under the 1994
Option Plan. In June, 1996, the Board of Directors adopted, and in August,
1996, the stockholders approved an amendment (the "Amendment No. 1") to the
1994 Board of Directors Stock Option Plan (the "1994 Option Plan") to (i)
increase the number of shares reserved for issuance from 100,000 to 150,000
shares; (ii) revise Section 2.3 of the 1994 Option Plan to create a new
committee of the Board of Directors, called the Directors Compensation
Committee which shall consist of two members of the Board of Directors, who
are not outside directors, and who, during the one year period prior to the
creation of the new committee, and during their service on the committee, were
(and are) not granted options or after equity awards under any plan of the
Company, and shall have authority to administer the 1994 Option Plan; (iii)
revise Section 4.5 of the 1994 Option Plan to give the new Directors
Compensation Committee wide discretion to determine grants of options;
(iv) add a new Section 6.1 to the 1994 Option Plan, which, subject to the
discretion of the new Directors Compensation Committee, would create two types
of option awards, and (v) amend Section 7.3 of the 1994 Option Plan entitled
"Mergers and Consolidation" to reduce the percentage of the Company's
outstanding shares necessary to be sold or exchanged before outstanding options
"accelerate" and become immediately exercisable, from 80% to 50% of outstanding
shares. If 50% or more of the outstanding shares are sold to or acquired by
another corporation or person or persons, including a group, then the exercise
of all outstanding options accelerates and they become fully exercisable
concurrent with the closing of the triggering sale or exchange. By lowering
the triggering event from a sale or exchange of 80% to a sale or exchange of
50% of outstanding shares, the 1994 Option Plan provisions will be more similar
to so-called "change-of-control" clauses in other companies' incentive plans
and, the Companys' Compensation Committee believes and recognizes that a 50% or
greater sale of the Company's shares represents a change of control that ought
to accelerate vesting.
This Registration Statement relates to the additional shares to be
issued pursuant to Amendment No. 1 to the 1994 Option Plan. The following
discussion summarizes the principal features of the 1994 Option Plan. This
description of the 1994 Option Plan is qualified in its entirety by reference
to the full text of the 1994 Option Plan, a copy of which may be requested from
the Company.
The Company's principal executive offices are located at 8737 Wilshire
Boulevard, Beverly Hills, California 90211, (310) 652-4880.
PURPOSE
The purpose of the 1994 Option Plan is to strengthen the Company by
providing to non-employee directors added incentives for high levels of
performance and to encourage stock ownership in the Company. The 1994 Option
Plan seeks to accomplish these goals by providing a means whereby such persons
may be given an opportunity to purchase, by way of option, Common Stock of the
Company. The 1994 Option Plan is also intended to enable the Company to
compete effectively for and retain the services of such persons and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its subsidiaries.
The Company intends that the options issued under the 1994 Option Plan
shall be options which do not qualify as incentive stock options as that term
is used in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor thereto ("Non-Qualified Stock Options"). The 1994
Option Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
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ADMINISTRATION
The Board has delegated administration of the 1994 Option Plan to its
Directors Compensation Committee ("Committee") comprised of two members of the
Board who are not outside directors, and who during the one year period prior
to the creation of the Committee, and during their service on the Committee,
were (and are) not granted options or the equity awards under any plan of the
Company. The Committee shall only have power and authority to administer the
1994 Option Plan and the current Compensation Committee would continue to
handle compensation as at present. The 1994 Option Plan provides that only
non-employee directors are eligible to participate. Furthermore, the 1994
Option Plan provides, subject to the discretion of the Committee, for the grant
of two types of option awards. The first type of option award is a 10,000
share grant when a person joins the Board of Directors, with vesting remaining
the same, 50% two years after grant, 75% three years after grant, and 100% four
years after grant. The second type of option award is in addition to the
initial 10,000 share grant on becoming a director, is a new compensation tool
for the Company to encourage its outside directors to have an equity stake in
the Company by linking option grants to the director's option market purchases
of the Company shares. Outside directors shall be eligible for option grants
equal to four times their open market purchases (once their open market
purchase or series of purchases equals 2,500 shares) for a maximum grant of
10,000 shares. Grants shall be made three business days after the open market
purchase (or, in the case of a series of purchases aggregating 2,500 shares, on
the third business day following the last purchase date in the series) at 100%
of market price on the grant date. The options shall vest 50% one year after
the date of grant and 100% two years after the date of grant. Further
information may be obtained from David I. Sunkin, Vice President and General
Counsel, at 8737 Wilshire Boulevard, Beverly Hills, California 90211 or by
calling (310) 652-4880.
SHARES RESERVED
There are 150,000 shares of Common Stock, par value $1.00, reserved
for issuance upon exercise of options granted under the 1994 Option Plan, as
amended. Shares of Common Stock will be made available from the authorized but
unissued shares of the Company or from shares reacquired by the Company,
including shares purchased in the open market. If any option granted under the
1994 Option Plan shall for any reason expire, terminate, be canceled or
otherwise be annulled without having been exercised in full, the shares not
purchased under such option shall again become available for the 1994 Option
Plan.
ELIGIBILITY
Only non-employee directors are eligible to participate in the 1994
Option Plan. As of the date hereof, there are four (4) non-employee directors
on the Board of the Company. To date, the Board has authorized the issuance of
an aggregate of Non-Qualified Stock Options to purchase approximately 70,000
shares of the Company's Common Stock at exercise prices ranging from $4.50 per
share to $7.438 per share.
OPTION PRICE
The exercise price of each Non-Qualified Stock Option shall be 100% of
the fair market value of the Common Stock subject to the option on the date the
option is granted. An option shall be exercised by written notice to the
Company upon terms and conditions as the optionee's stock option agreement
provides and in accordance with such other procedures for the exercise of
options as the Board of Directors or Committee may establish from time to time.
The purchase price of Common Stock acquired pursuant to an option shall be paid
by such method as or methods as the Committee may determine and may consist of
cash or check payable to the order of the Company, in whole shares of Common
Stock of the Company owned by the optionee having a fair market value on the
exercise date (determined by the Committee in accordance with any reasonable
valuation method) equal to the option price for the shares being purchased.
Payments of Common Stock shall be made by delivery of Common Stock certificates
properly endorsed for transfer in negotiable form. If other than the optionee,
the person or persons exercising the option shall be required to furnish the
Company appropriate documentation that such person or persons have the full
legal right and power to exercise the option on behalf of and for the optionee.
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ADJUSTMENTS UPON CHANGES IN COMMON STOCK; REORGANIZATION, MERGER, CONSOLIDATION
If the outstanding shares of the Common Stock of the Company are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities of the Company, without receipt of consideration
by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which options may be granted. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options, or portions thereof, which shall have
been granted prior to any such change shall likewise be made. Adjustments
shall be made by the Committee whose determination as to what adjustments shall
be made, and the extent thereof, shall be final and conclusive. No fractional
shares of stock shall be issued under the 1994 Option Plan on account of any
such adjustment. Upon the dissolution or liquidation of the Company, or upon
any reorganization, merger or consolidation of the Company where the Company is
the surviving corporation and the stockholders immediately prior to such
transaction do not own at least 50% of the Company's Common Stock immediately
after such transaction, or upon any reorganization, merger or consolidation of
the Company where the Company is not the surviving corporation, or upon a sale
of substantially all of the assets or 50% of the outstanding Common Stock, the
1994 Option Plan will terminate and any options granted prior thereto shall
become immediately exercisable in full and shall remain exercisable until the
effective date of such transaction.
VESTING
The Committee shall determine vesting periods, if any, for options
granted under the 1994 Option Plan.
EXPIRATION, TERMINATION AND TRANSFER OF OPTIONS
Subject to earlier termination as provided in the 1994 Option Plan,
the term of each Non-Qualified Stock Option may not exceed 10 years. For
purposes of the 1994 Option Plan, the date of grant of an option shall be the
date on which the Committee takes final action approving the award of the
option, notwithstanding the date the optionee accepts the option, the date of
execution of the option agreement, or any other date with respect to such
option. Except in the event of termination of the optionee's position due to
death, disability or termination for "substantial cause" (as defined below),
options will terminate three months after an optionee ceases to be a
non-employee director unless the options by their terms were scheduled to
terminate earlier but only as to such number of shares as to which the option
was exercisable on the date of termination. If termination occurs by reason of
disability (as defined in the 1994 Option Plan) such three month period shall
be extended to one year. If the optionee is terminated for "substantial
cause," the optionee's right to exercise will terminate at the time notice of
termination is given. Termination for "substantial cause" shall include (i)
the commission of a criminal act against, or in derogation of the interests of
the Company or any of its subsidiaries, (ii) knowingly divulging confidential
information, (iii) interference with any major customer, or (iv) any similar
action that the Committee may deem sufficiently injurious to the interests of
the Company. If an optionee dies while a member of the Board or within three
months after cessation of such position (except for "substantial cause"), his
or her estate or personal representation shall have the right to exercise such
option before the date such option would otherwise terminate, but only as to
the number of shares as to which such option was exercisable on the date of
death. An option by its terms may only be transferred by will or by laws of
descent or pursuant to a qualified domestic relations order, and, except as
otherwise required pursuant to a qualified domestic relations order, options
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person (or in the case of disability by his or her court
appointed legal representative).
TERMINATION AND AMENDMENT OF THE 1994 OPTION PLAN
The 1994 Option Plan will terminate 10 years from the date it is
approved by the shareholders of the Company, or upon such earlier date
determined by the Board of Directors. The 1994 Option Plan will also terminate
upon liquidation, reorganization, merger or consolidation of the Company as
discussed above. No options may be granted under the 1994 Option Plan after it
is terminated. No termination, suspension, modification or amendment of the
1994 Option Plan may, without the consent of the person to whom an option shall
theretofore have been granted, adversely affect the rights of such person with
respect to such option. No modification, extension, renewal or other change in
any option granted under the
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1994 Option Plan shall be made after the grant of such option, unless the same
is consistent with the provisions of the 1994 Option Plan.
The 1994 Option Plan may be amended by the Board of Directors at any
time, and from time to time. However, the provisions of the 1994 Option Plan
may not be amended more than once every six (6) months, other than to comport
with changes in the Code, ERISA or the rules thereunder. Furthermore, except
as otherwise provided in the 1994 Option Plan, no amendment shall be effective
unless approved by a vote of the majority of the outstanding shares of the
common stock of the Company, represented in person or by proxy and entitled to
vote, at a meeting of the shareholders of the Company and any adjournment or
postponement thereof if the amendment will: (a) materially increase the number
of shares reserved for options under the 1994 Option Plan; (b) materially
modify the requirements as to eligibility for participation in the 1994 Option
Plan; or (c) materially increase the benefits accruing to participants under
the 1994 Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is only a summary of the principal federal
income tax consequences of the options and rights to be granted under the 1994
Option Plan, and is based on existing federal law (including administration,
regulations and rulings) which is subject to change, in some cases
retroactively. This discussion is also qualified by the particular
circumstances of individual optionees, which may substantially alter or modify
the federal income tax consequences herein discussed. Each employee should
consult his or her tax advisor with respect to the specific tax consequences of
his or her participation in the 1994 Option Plan.
Generally, under present law, in the case of Non-Qualified Stock
Options, no income generally is recognized by the optionee at the time of the
grant of the option. Under present law the optionee generally will recognize
ordinary income at the time the Non-Qualified Stock Option is exercised equal
to the aggregate fair market value of the shares acquired less the option
price. Ordinary income from a Non-Qualified Stock Option will constitute
compensation for which withholding may be required under federal and state law.
Subject to special rules applicable when an optionee uses Common Stock
of the Company to exercise an option, shares acquired upon exercise of a
Non-Qualified Stock Option will have a tax basis equal to their fair market
value on the exercise date or other relevant date on which ordinary income is
recognized and the holding period for the shares generally will begin on the
date of exercise or such other relevant date. Upon subsequent disposition of
the shares, the optionee generally will recognize a capital gain or loss.
Provided the shares are held by the optionee for more than one year prior to
disposition, such gain or loss will be treated as long-term capital gain or
loss.
The Company will generally be entitled to a deduction equal to the
ordinary income (i.e., compensation) portion of the gain recognized by the
optionee in the case of a "disqualifying disposition" of an Incentive Stock
Option or in connection with the exercise of a Non-Qualified Stock Option
provided the Company complies with any withholding requirements of federal and
state law.
RESTRICTION ON RESALE
Certain directors of the Company may be deemed to be "affiliates" as
that term is defined under the Securities Act of 1933, as amended (the
"Securities Act of 1933"). Common Stock acquired under the 1994 Option Plan by
an affiliate may only be reoffered or resold under an effective registration
statement, under Rule 144 or other exemption from the registration requirements
of the Securities Act of 1933.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
The Company will make available to all eligible directors (the
"Participants"), without charge, upon written or oral request, the documents
incorporated by reference in Item 3 of Part II of the registration statement,
and such documents are hereby incorporated by reference into this Section 10(a)
prospectus. All Participants may, upon oral or written request and without
charge, receive all other documents required to be delivered to Participants
pursuant to Rule 428(b) of the Securities
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Act of 1933, as amended. Such requests are to be directed to David I. Sunkin,
Vice President and General Counsel of the Company at 8737 Wilshire Boulevard,
Beverly Hills, California 90211, (310) 652-4880.
PART II--INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are hereby incorporated by reference in the
registration statement and are deemed to be a part thereof from the date of
filing such documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the period
ended July 31, 1996; and
(c) The Company's Current Report on Form 8-K as filed with the
Exchange on September 12, 1996.
All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document, all or a portion
of which is incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides, in
summary, that the directors and officers of the Corporation may, under certain
circumstances, be indemnified by the Corporation against all expenses incurred
by or imposed upon them as a result of actions, suits or proceedings brought
against them as such directors and officers, or as directors or officers of any
other organization at the request of the Corporation, if they act in good faith
and in a manner they reasonably believe to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, have no reasonable cause to believe their conduct was unlawful,
except that no indemnification shall be made against expenses in respect to any
claim, issue or matter as to which they shall have been adjudged to be liable
to the Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
they are fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper. Section 145 of the Delaware General Corporation
Law also provides that directors and officers of the Corporation are entitled
to such indemnification by the Corporation to the extent that such persons are
successful on the merits or otherwise in defending any such action, suit or
proceeding. The Corporation's Bylaws provide for the indemnification by the
Corporation of officers and directors to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.
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Section 102 of the Delaware General Corporation Law provides that a
corporation, in its Certificate of Incorporation, may eliminate the personal
liability of its directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, other than liability for
(1) any breach of the director's duty of loyalty to the corporation of its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) any transaction from
which the director derived an improper personal benefit and (4) unlawful
payment of dividends or unlawful stock purchases or redemptions. The
Corporation's Certificate of Incorporation provides for the elimination of
personal liability of its directors as permitted by Section 102 of the Delaware
General Corporation Law.
The Corporation maintains a Directors and Officer's Insurance Policy
for the benefit of its directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The Exhibits filed herewith are listed on the Exhibit Index on page
10.
ITEM 9. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) 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.
2. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expense incurred or paid by a director, officer or controlling
person of the
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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 of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Beverly Hills, State of California, on
September 20, 1996.
EARL SCHEIB, INC.,
a Delaware Corporation
By /s/ DANIEL A. SEIGEL
------------------------------------
Daniel A. Seigel
President and Chief Executive Officer
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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 and on the dates indicated.
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Name Title Date
---- ----- ----
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/s/ DANIEL A. SEIGEL Chief Executive Officer September 20, 1996
- ------------------------------------ (Principal Executive
Daniel A. Seigel Officer)
/s/ JOHN BRANCH Senior Vice President September 20, 1996
- ------------------------------------ and Chief Financial
John Branch Officer (Principal
Financial Officer)
/s/ PHILIP WM. COLBURN Director September 20, 1996
- ------------------------------------
Philip Wm. Colburn
/s/ ALEXANDER L. KYMAN Director September 20, 1996
- ------------------------------------
Alexander L. Kyman
/s/ DONALD R. SCHEIB Director September 20, 1996
- ------------------------------------
Donald R. Scheib
/s/ ROBERT L. SPENCER Director September 20, 1996
- ------------------------------------
Robert L. Spencer
/s/ ROBERT WILKINSON Director September 20, 1996
- ------------------------------------
Robert Wilkinson
</TABLE>
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EXHIBIT INDEX
<TABLE>
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Exhibit Page
Number Exhibit Number
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4.1* Earl Scheib, Inc. 1994 Board of Directors Stock Option Plan.
4.2 Amendment No. 1 to Earl Scheib, Inc. 1994 Board of Directors Stock Option Plan.
5.1 Opinion of Buchalter, Nemer, Fields & Younger, a Professional corporation
23.1 Prior Independent Auditor's Consent
23.2 Current Independent Auditor's Consent
23.3 Legal Counsel Consent is contained in Exhibit 5
</TABLE>
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* Incorporated by reference to Registration Statement on Form S-8
(No. 33-87130).
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EXHIBIT 4.2
AMENDMENT NO. 1
TO
THE EARL SCHEIB, INC.
1994 BOARD OF DIRECTORS STOCK OPTION PLAN
The Plan is hereby amended as follows:
(a) Section 2.3 (Committee) is amended to read as follows:
"2.3 Committee shall mean Directors Compensation Committee of the Board as
determined by resolution of the Board."
(b) Section 3.1 (Number of Shares Available) is amended to read as follows:
"3.1 Number of Shares Available. The total number of shares of Common Stock
which are available for granting Options hereunder shall be one
hundred fifty thousand (150,000) (subject to adjustment as provided
below in Section 3.3 and in Article VII hereof)."
(c) Article IV (Administration) is amended by the addition of a new Section 4.5
thereto which shall read as follows:
"4.5 Determinations to be Made by the Committee. Notwithstanding any other
provision of this Plan to the contrary, the Committee shall have the
authority to determine: (i) the Grantees; (ii) the number of shares of
Common Stock subject to an Option; (iii) the date or dates upon which
an Option may be exercised or is granted; (iv) the manner in which an
Option may be exercised; (v) such other terms to which an Option is
subject (including the manner in which it vests); and (vi) the form of
any Option Agreements."
(d) Section 6.1 (Number of Shares and Purchase Price; Formula) is amended to
read as follows:
"6.1 Number of Shares and Purchase Price; Formula.
(a) Each Independent Director shall receive Options to purchase ten
thousand (10,000) shares of Common Stock on the date this Plan is
approved by a majority of the board of directors. In addition each
person who becomes a director of the Company after such date and who
is an Independent Director shall be eligible to participate in the
Plan and shall automatically receive, on the date such person is
elected to the Board an Option to purchase 10,000 shares of Common
Stock.
(b) In addition to the Option grant described in paragraph (a), above,
provided an Independent Director shall have made a Qualifying
Purchase (as such term is defined in paragraph (c) of this Section
6.1) then on the third business day following the date of such
Qualifying Purchase, such Independent Director shall automatically
be granted an Option to purchase that number of shares of Common
Stock equal to four times the number of shares purchased by such
Independent Director in such Qualifying Purchase, up to a maximum
Option to purchase equal to 10,000 shares of Common Stock.
(c) For purposes of this Section 6.1, a Qualifying Purchase shall mean
the purchase by an Independent Director for his or her own account
in the open market of 2,500 shares or more of Common Stock; provided
that prior to any such purchase the Independent Director shall have
notified the Company's General Counsel of his or her intent to
effect a Qualifying Purchase and received such General Counsel's
approval thereof. Such approval may be conditioned upon the General
Counsel's receipt of satisfactory advice from the Company's outside
counsel to the effect that such Qualifying Purchase is permissible
under applicable law. A Qualifying Purchase shall be deemed to
include a series of open market purchases made during the course of
two or more trading days, so long as such purchases are approved as
aforesaid and provided that the date of grant for purposes of
<PAGE> 2
Section 6.1(b) and 6.1(c) shall be deemed the third business day
following the final trading day in which such series of purchases is
completed.
(d) The price per share at which shares may be purchased pursuant to any
Option granted under the Plan shall be the Fair Market Value on the
date the Option is granted. The provisions of this Section 6.1 shall
not be amended more than once every six months, other than to
comport to changes in the Code and ERISA, or the rules thereunder.
(e) The foregoing provisions of this Section 6.1 shall be subject to the
authority conferred on the Committee in Section 4.5, including,
without limitation, the authority to vary such provisions and make
such additional grants as the Committee in its discretion may
determine."
(e) Section 6.3 (Maximum Term; Date of Exercise) is amended to read as follows:
"6.3 Maximum Term; Date of Exercise. Each Option Agreement shall be for a
period of ten years. Subject to the authority conferred on the
Committee in Section 4.5, the Options shall vest as follows:
(i) with respect to Options granted pursuant to Section 6.1(a),
-- 50% two years after the date of grant
-- 75% three years after the date of grant
-- 100% four years after the date of grant
(ii) with respect to Options granted pursuant to Section 6.1(b),
-- 50% one year after the date of grant
-- 100% two years after the date of grant"
(f) Section 7.3 (Mergers and Consolidations) is amended to read as follows:
"7.3 Mergers and Consolidations. Notwithstanding the other Sections of this
Article VII, upon the dissolution or liquidation of the Company, or
upon any reorganization, merger or consolidation of the Company with
one or more corporations where the Company is the surviving
corporation and the stockholders of the Company immediately prior to
such transaction do not own at least eighty percent (80%) or more of
the Company's Common Stock immediately after such transaction, or upon
any reorganization, merger or consolidation of the Company with one or
more corporations where the Company is not the surviving corporation,
or upon a sale of substantially all of the assets or the sale or
exchange of fifty percent (50%) or more of the then outstanding shares
of Common Stock of the Company to another person, corporation or
entity, including any group within the meaning of Regulation 13D
promulgated under Section 13(d) of the Securities Exchange Act of 1934
(any such reorganization, merger, consolidation, sale of assets, or
sale of shares of Common Stock being hereinafter referred to as the
"Transaction"), the Plan shall terminate; provided however, that
(i) any Options theretofore granted and outstanding under the Plan shall
become immediately exercisable in full;
(ii) the termination of the Plan, and any exercise of any Option (to the
extent that the holder's right to exercise such Option has been
accelerated by the operation of Section 7.3(i)), shall be
concurrent with, subject to and conditioned upon the consummation
of the Transaction to which such termination and acceleration
relates, and if, for any reason, such Transaction is abandoned,
exercise of the Option shall be void and such Option shall
thereafter be exercisable only as permitted by the Plan and the
Option Agreement, which shall remain in full force and effect."
<PAGE> 3
Except as amended hereby, the Plan and each provision thereof remains in full
force and effect. Capitalized terms used herein shall have the same meaning as
defined in the Plan.
* * * *
<PAGE> 1
EXHIBIT 5.1
September 18, 1996
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Office of Applications and Reports Services
Re: Earl Scheib, Inc.
Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Earl Scheib, Inc., a Delaware
corporation (the "Company"), in connection with the registration of 50,000
shares of common stock, $1.00 par value (the "Shares") with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "1933 Act"), pursuant to a registration statement on Form S-8 (the
"Registration Statement"). The Shares are being registered on behalf of the
Company and will be issued pursuant to the Company's 1994 Board of Directors
Stock Option Plan (the "Plan").
This opinion is being delivered in accordance with the
requirements of Item 601(b)(5)(i) of Regulation S-K under the 1933 Act.
In our capacity as counsel to the Company, we have reviewed
such documents and made such inquiries as we have reasonably deemed necessary
to enable us to render the opinion expressed below. In all such review, we
have made certain customary assumptions such as the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
lack of any undisclosed modifications, waivers, or amendments to any documents
reviewed by us and the conformity to authentic original documents of all
documents submitted to us as conformed or photostatic copies. For purposes of
rendering this opinion, we have investigated such questions of law as we have
deemed necessary.
<PAGE> 2
Securities and Exchange Commission
September 18, 1996
Page 2
On the basis of the foregoing, and in reliance thereon and
subject to the assumptions, qualifications, exceptions and limitations
expressed herein, we are of the opinion that when the Shares are issued in
accordance with the terms of the Plan, the Shares will be duly authorized,
legally issued, fully paid and non-assessable.
This opinion is limited to the present laws of the State of
California and of the United States of America, and the corporate law of the
State of Delaware.
This opinion is solely for your information in connection with
the offer and sale of the Shares of the Company, and is not, without prior
written consent of this firm, to be quoted in full or in part or otherwise
referred to in any documents nor to be filed with any governmental agency or
other persons, other than with the Commission and various state securities
administrators in connection with the qualification of the Shares, to which
reference and filings we hereby consent. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the 1933 Act or the rules and regulations of the Commission.
Very truly yours,
Buchalter, Nemer, Fields & Younger
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Earl Scheib, Inc.
Beverly Hills, California
We hereby consent to the use in the Registration Statement on Form S-8,
(Registration Numbers 33-______) of our report dated June 26, 1995, relating to
the audit of the consolidated financial statements and schedules of Earl Scheib,
Inc. and Subsidiaries for each of the two years ended April 30, 1995 which are
contained in and incorporated by reference to the Audit Report on Form 10-K for
the year ended April 30, 1996.
BDO SEIDMAN, LLP
Los Angeles, California
September 16, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Earl Scheib, Inc. on Form S-8 of our report dated July 3, 1996, incorporated by
reference in the Annual Report on Form 10-K of Earl Scheib, Inc. for the year
ended April 30, 1996.
/s/ Deloitte & Touche LLP
Los Angeles, California
September 17, 1996
