As filed with the Securities and Exchange Commission on December 24, 1998
Registration No. 333-66447-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
Post-Effective Amendment
No. 1
On
FORM S-8
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933*
-----------------------
MEDQUIST INC.
----------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 22-2531298
-------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Greentree Centre
Suite 311
Marlton, New Jersey 08053
--------------------------------------
(Address of Principal Executive Offices)
The MRC Group, Inc. Amended and Restated
1992 Employee Stock Option Plan
Stock Option Agreements with Edward L. Samek
Amended and Restated Non-Qualified Stock Option Agreement with John Dayani
--------------------------------------------------------------------------
(Full title of plans)
John M. Suender, Senior Vice President, General Counsel and Secretary
MedQuist Inc.
Five Greentree Centre
Suite 311
Marlton, New Jersey 08053
(609) 596-8877
Facsimile (609) 797-5949
-----------------------------------------
(name, address and telephone number,
including area code, of agent for service)
Copies of Communications to:
Francis E. Dehel, Esquire
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
(215) 569-5500
Facsimile (215) 569-5555
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Title Of Each Class Of Amount To Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered(1) Offering Price Per Unit Offering Price Registration Fee
=======================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, no par value 1,555,931 (2) (2) $ (2)
=======================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(a) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of shares as may
be issued pursuant to stock splits, stock dividends and certain
anti-dilution provisions contained in the Plan.
(2) Not applicable. All filing fees payable in connection with the registration
of the issuance of these securities were paid in connection with the filing
of (a) preliminary proxy materials on Schedule 14A of MedQuist Inc. on
September 25, 1998, and (b) the Registrant's Form S-4 Registration
Statement (No.333-66447) on October 30, 1998.
* Filed as a Post-Effective Amendment on Form S-8 to such Form S-4
Registration Statement pursuant to the procedure described in Part II under
"Introductory Statement."
<PAGE>
PART I
Information Required in the Section 10(a) Prospectus
The documents containing the information specified in Part I of Form S-8
will be sent or given to participants in The MRC Group, Inc. Amended and
Restated 1992 Employee Stock Option Plan, the Stock Option Agreements with
Edward L. Samek, and the Amended and Restated Non-Qualified Stock Option
Agreement with John Dayani (the "Plans") as specified by Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act").
Such documents are not being filed with the Commission, but constitute
(along with the documents incorporated by reference into this Registration
Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
Information Not Required in the Prospectus
Introductory Statement
MedQuist Inc. (the "Company" or the "Registrant") hereby amends its
Registration Statement on Form S-4 (No. 333-66447) (the "Form S-4") by filing
this Post-Effective Amendment No. 1 on Form S-8 (the "Amendment No. 1") with
respect to up to 1,555,931 shares of the Registrant's common stock, without par
value ("Common Stock" or "MedQuist Common Stock"), issuable in connection with
the following plans (the "Plans") of The MRC Group, Inc. ("MRC"): The MRC Group,
Inc. Amended and Restated 1992 Employee Stock Option Plan, Stock Option
Agreements with Edward L. Samek and Amended and Restated Non-Qualified Stock
Option Agreement with John Dayani. All such shares of Common Stock were
previously included in the Form S-4.
On December 10, 1998, Mercury Acquisition Corporation, a Missouri
corporation and a wholly owned subsidiary of the Registrant ("Sub"), was merged
with and into MRC (the "Merger") pursuant to an Agreement and Plan of Merger
dated September 18, 1998, among the Registrant, Sub and MRC (the "Merger
Agreement"). As a result of the Merger, each outstanding share of MRC common
stock and preferred stock (with certain specified exceptions) was converted into
shares of Common Stock of the Registrant pursuant to the exchange ratios set
forth in the Merger Agreement. Also as a result of the Merger, each outstanding
unexpired option to purchase shares of MRC common stock (a "MRC Stock
Option"),was converted into an option to purchase MedQuist Common Stock
("MedQuist Stock Options"). Each holder of MRC Stock Options received a number
of MedQuist Stock Options equal to (i) the number of shares of MRC Common Stock
issuable upon the exercise of such holder's MRC Stock Options multiplied by (ii)
0.5163. Any fractional shares of MedQuist Common Stock resulting from such
multiplication was rounded to the nearest whole share. The exercise price for
the MedQuist Stock Options equals (A) the exercise price of the MRC Stock Option
for which the MedQuist Stock Option was converted and issued divided by (B)
0.5163. Such exercise price was rounded to the nearest whole cent. The stock
options to be registered hereunder have been assumed by the Registrant pursuant
to the Merger Agreement. These options were originally granted to the officers,
employees, directors and consultants of MRC under the Plans.
The designation of Amendment No. 1 as Registration No. 333-66447-01 denotes
that Amendment No. 1 relates only to the Common Stock issuable pursuant to the
Plans, and that this is the first Post-Effective Amendment to the S-4 filed with
respect to such shares.
Item 3. Incorporation of Certain Documents by Reference.
The Registrant hereby incorporates by reference in this Registration Statement
the following documents:
(a) Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997; and
(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 December 31, 1997; and
<PAGE>
(c) The description of the Registrant's Common Stock, which is
incorporated by reference from the Registrant's Registration Statement
on Form 8-K filed with the Commission on March 11, 1992; and
(d) Registrant's Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on December 24, 1998.
All documents subsequently filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the
date hereof, and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold hereunder, shall be deemed incorporated by
reference into this Registration Statement and to be a part hereof from the date
of the filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
A. Fred Ruttenberg, a partner in Blank Rome Comisky & McCauley LLP, is a
director of the Company. Mr. Ruttenberg is the beneficial owner of 93,570 shares
of MedQuist Common Stock.
Item 6. Indemnification of Directors and Officers.
Section 14A:3-5 of the NJBCA permits each New Jersey business corporation
to indemnify its directors, officers, employees and agents against expenses and
liability for each such person's acts taken in his or her capacity as a
director, officer, employee or agent of the corporation if such actions were
taken in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to any
criminal proceeding, if he or she had no reasonable cause to believe his or her
conduct was unlawful. Article 10 of MedQuist's By-laws provides for
indemnification for its directors and officers, to the full extent permitted by
applicable law, including, but not limited to, Section 14A:3-5 of the NJBCA.
MedQuist maintains insurance to cover its directors and officers for
liabilities which may be incurred by its directors and officers in the
performance of their duties.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement
or, where so indicated have been previously filed and are incorporated herein by
reference.
Exhibit Number Description
-------------- -----------
5.1 Opinion of Blank Rome Comisky & McCauley LLP
<PAGE>
23.1 Consent of Blank Rome Comisky & McCauley LLP
(included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Skoda, Minotti, Reeves & Co.
24.1 Power of Attorney (included on signature page)
99.1 The MRC Group, Inc. Amended and Restated 1992 Employee
Stock Option Plan
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 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. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective 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;
Provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or S-8 and 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 Securities Exchange Act of 1934, as amended, (the "Exchange Act") that
are incorporated by reference in the Registration Statement.
(2) That for the purpose of determining any liability under the
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.
<PAGE>
(3) To remove from registration by means of 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 benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement 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 Securities and Exchange 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.
<PAGE>
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 this Post-Effective Amendment No. 1 on Form S-8 to Form
S-4 Registration Statement and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Marlton and the State of New Jersey, as of December 23, 1998.
MEDQUIST INC.
By: /s/ David A. Cohen
------------------------------------
David A. Cohen
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David A. Cohen and John R. Emery, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendments (including, without
limitation, post-effective amendments) to this Registration Statement and any
registration statement filed under Rule 462 under the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 on Form S-8 to Form S-4 Registration Statement
has been signed by the following persons as of December 23, 1998 in the
capacities indicated:
Signatures Title
---------- -----
/s/ David A. Cohen
- -------------------------------------- Chairman and Chief Executive Officer
David A. Cohen (principal executive officer)
/s/ John R. Emery
- -------------------------------------- Senior Vice President, Treasurer and
John R. Emery Chief Financial Officer (principal
financial officer and principal
accounting officer)
/s/ John A. Donohoe, Jr.
- -------------------------------------- President, Chief Operating Officer
John A. Donohoe, Jr. and Director
/s/ James R. Emshoff
- -------------------------------------- Director
James R. Emshoff
[EXECUTIONS CONTINUED ON FOLLOWING PAGE]
<PAGE>
Signatures Title
---------- -----
/s/ William T. Carson
- -------------------------------------- Director
William T. Carson
/s/ Richard J. Censits
- -------------------------------------- Director
Richard J. Censits
/s/ John T. Casey
- -------------------------------------- Director
John T. Casey
/s/ A. Fred Ruttenberg
- -------------------------------------- Director
A. Fred Ruttenberg
/s/ John H. Underwood
- -------------------------------------- Director
John H. Underwood
/s/ Terrence J. Mulligan
- -------------------------------------- Director
Terrence J. Mulligan
/s/ R. Timothy Stack
- -------------------------------------- Director
R. Timothy Stack
/s/ Edward L. Samek
- -------------------------------------- Director
Edward L. Samek
/s/ Bruce K. Anderson
- -------------------------------------- Director
Bruce K. Anderson
/s/ Richard H. Stowe
- -------------------------------------- Director
Richard H. Stowe
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Blank Rome Comisky & McCauley LLP
23.1 Consent of Blank Rome Comisky & McCauley LLP
(included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Skoda, Minotti, Reeves & Co.
24.1 Power of Attorney (included in Signature Page)
99.1 The MRC Group, Inc. Amended and Restated 1992
Employee Stock Option Plan
EXHIBIT 5.1
Opinion of Blank Rome Comisky & McCauley LLP
December 23, 1998
MedQuist Inc.
Five Greentree Centre
Suite 311
Marlton, NJ 08053
Re: MedQuist Inc. Registration Statement on Form S-8
------------------------------------------------
Gentlemen:
We have acted as counsel to MedQuist Inc. (the "Company") in connection
with the Registration Statement on Form S-8 (the "Registration Statement") filed
by the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, relating to the offer and sale of up to
1,555,931 shares of common stock, no par value (the "Common Stock"), by the
Company pursuant to The MRC Group, Inc. Amended and Restated 1992 Employee Stock
Option Plan, Stock Option Agreements with Edward L. Samek and the Amended and
Restated Non-Qualified Stock Option Agreement with John Dayani (the "Plans").
This opinion is furnished pursuant to the requirements of Item 601(b)(5) of
Regulation S-K.
In rendering this opinion, we have examined only the following documents:
(i) the Company's Amended and Restated Certificate of Incorporation and Bylaws,
(ii) resolutions adopted by the Board of Directors of the Company, (iii) the
Registration Statement and (iv) the Plan. We have not performed any independent
investigation other than the document examination described. Our opinion is
therefore qualified in all respects by the scope of that document examination.
We have assumed and relied, as to questions of fact and mixed questions of law
and fact, on the truth, completeness, authenticity and due authorization of all
certificates, documents, and records examined and the genuineness of all
signatures. This opinion is limited to the laws of the State of New Jersey.
Based upon and subject to the foregoing, we are of the opinion that the
shares of Common Stock of the Company which are being offered and sold by the
Company pursuant to the Registration Statement and the Plan, when sold in the
manner and for the consideration contemplated by the Registration Statement and
the Plan, will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registrant Statement.
Sincerely,
BLANK ROME COMISKY & McCAULEY LLP
EXHIBIT 23.2
Consent of Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated December 22,
1998 on the supplemental consolidated financial statements of MedQuist Inc. and
Subsidiaries included in the S-3 Registration Statement of MedQuist Inc. and our
report dated September 18, 1998 on the restated consolidated financial
statements of MedQuist Inc. and Subsidiaries included in Item 5 in MedQuist
Inc.'s Form 10-Q for the period ended September 30, 1998, and to all references
to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
--------------------------
Philadelphia, PA
December 22, 1998
EXHIBIT 23.3
Consent of Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports (i) dated March 3, 1998
(except with respect to the matters discussed in Note 11, as to which the date
is September 18, 1998), on the consolidated financial statements of The MRC
Group, Inc. and Subsidiary included on pages F-27 through F-46 of the S-4
Registration Statement of MedQuist Inc. for the years ended December 31, 1995,
1996 and 1997 and (ii) dated May 1, 1998, on the financial statements of Medical
Records Corp. included on pages F-60 through F-66 of the S-4 Registration
Statement of MedQuist Inc. for the period ended July 19, 1996, all of which are
incorporated by reference in the Form 8-K of MedQuist Inc. dated December 15,
1998 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------
Cleveland, Ohio,
December 22, 1998
EXHIBIT 23.4
Consent of Skoda, Minotti, Reeves & Co.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 16, 1996
(except with respect to the matters discussed in Note 2, as to which the date is
May 26, 1998) on the combined financial statements of Medical Records Corp. and
Affiliate included on pages F-53 through F-59 of the S-4 Registration Statement
of MedQuist Inc. for the year ended December 31, 1995, all of which are
incorporated by reference in the Form 8-K of MedQuist Inc. dated December 15,
1998, and to all references to our Firm included in this registration statement.
/s/ SKODA, MINOTTI, REEVES & CO.
---------------------------------
Mayfield Village, Ohio,
December 22, 1998
EXHIBIT 99.1
THE MRC GROUP, INC.
AMENDED AND RESTATED
1992 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of this plan (the "Plan") is to secure for The MRC
Group, Inc. (the "Company"), and its shareholders the benefits arising from
capital stock ownership by certain key advisors, consultants, employees and
members of the Board of Directors ("Directors") of the Company and its
subsidiary (as defined in Section 17 hereof), if any, who are expected to
contribute to the Company's future growth and success.
2. Types of Awards and Administration.
a. Types of Awards. Options granted pursuant to the Plan shall be as
specified herein and authorized by action of the Board of Directors of the
Company (or a Committee designated by the Board of Directors) and may be either
incentive stock options ("Incentive Stock Options") meeting the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
non-qualified stock options which are not intended to meet the requirements of
Section 422.
b. Administration. The Plan will be administered by the Board of
Directors of the Company, whose construction and interpretation of the
terms and provisions of the Plan shall be final and conclusive. The Board of
Directors may in its sole discretion, subject to the terms of this Plan, grant
options to purchase shares of the Company's Common Stock and issue shares upon
exercise of such options, as provided in the Plan. The Board shall have
authority, subject to the express provisions of the Plan and all applicable
securities laws, rules and regulations, to construe the respective option
agreements and the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of the respective
option agreements (which need not be identical), to advance the lapse of any
waiting or installment periods and exercise dates, and to make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of the Plan. The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency. No director shall be liable for any action or determination made in
good faith. The Board of Directors may, to the full extent permitted by law,
delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee.
c. Indemnification. In addition to such other rights of indemnification
as they may have as Directors or as members of the Committee, members of
the Board of Directors and of the Committee shall be indemnified by the Company
against reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any option (and/or related right) granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company), or paid by them in
satisfaction of a judgment of any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for negligence or misconduct in his
duties; provided that within sixty (60) days after the institution of such
action, suit or proceeding, such
<PAGE>
person shall offer the Company, in writing, the opportunity at its own
expense, to handle and defend the same.
3. Eligibility. Incentive Stock options shall be granted only to persons
who are, at the time of grant, full-time employees of the Company or Subsidiary,
if any. No person shall be granted an Incentive Stock Option under the Plan who,
at the time such option is granted, owns, directly or indirectly, Common Stock
of the Company possessing more than 10% of the total combined voting power of
all classes of stock of the Company or Subsidiary, unless the requirements of
paragraph (b) of Section 11 are satisfied. Non-qualified options may be granted
to officers, full-time employees, Directors and consultants to the Company or
any subsidiary. A person who has been granted an option under the Plan
("Optionee") may, if he or she is otherwise eligible, be granted additional
options if the Board of Directors shall so determine.
4. Stock Subject to Plan. Subject to adjustment as provided in Section 13
and 14 below, the maximum number of shares of Common Stock of the Company which
may be issued and sold under the Plan is 5,714,286 shares. Such shares may be
authorized and unissued shares or may be shares issued and thereafter acquired
by the Company. If an option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject to such option shall again be available for subsequent option grants
under the Plan. Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
5. Forms of Options. As a condition to the grant of an option under the
Plan, each recipient of an option shall execute an option agreement, in such
form not inconsistent with the Plan as shall be specified by the Board of
Directors at the time such option is granted.
6. Purchase Price.
a. General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors, provided,
however, that in the case of an Incentive Stock Option, the exercise price shall
not be less than 100% of the fair market value of such stock on the date of
grant of such option, or less than 110% of such fair market value in the case of
options described in paragraph (b) of Section 11. In the case of a Non-Qualified
stock option, the exercise price shall be determined by the Board of Directors
in their discretion on the date of grant of such option. As used herein, "fair
market value" on a given date shall mean the average of the highest and lowest
selling price per share on the principal securities exchange (or the Nasdaq
National Market) if the Common Stock is so traded; or if not so traded, "fair
market value" shall mean the average of closing "bid" and "ask" prices for one
share of the Common Stock of the Company as quoted on Nasdaq or a successor
quotation system, or on such other public market system as the Common Stock of
the Company is then listed, or in the event such quotations are not available,
"fair market value" shall be determined in the good faith discretion of the
Board of Directors.
b. Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of (i) cash, (ii) a check to
the order of the Company in an amount equal to the exercise price of such
options, (iii) shares of Common Stock of the Company already owned by the
Optionee for at least six (6) months prior to the date the Optionee tenders such
shares, having a fair market value equal in amount to the exercise price of the
options being exercised, or
2
<PAGE>
(iv) by any combination of such methods of payment, as permitted by
applicable law. The fair market value of any shares of the Company's Common
Stock which may be delivered upon exercise of an option shall be determined in
the manner specified above.
7. Option Period. Each option and all rights thereunder shall be expressed
to expire on such date as the Board of Directors shall determine, but in no
event after the expiration of ten (10) years from the day on which the option is
granted (subject to the special limitations set forth in paragraph (b) of
Section 11), and shall be subject to earlier termination as provided in the
Plan.
8. Exercise of Options. Each option may be exercisable, in part or in full,
at any time and from time-to-time, and subject to such conditions and
restrictions as determined by the Board of Directors and as set forth herein or
in the agreement evidencing such option, during a ten (10) year period following
the date of grant thereof (subject to the special limitations set forth in
paragraph (b) of Section 11). To the extent that an option to purchase shares is
not exercised by an Optionee when it becomes initially exercisable, it shall not
expire but shall be carried forward and shall be exercisable, on a cumulative
basis, until the expiration of the exercise period.
9. Nontransferability of Options. No option granted under the Plan shall be
assignable or transferable by the person to whom it is granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the rules thereunder; provided, however, that
if so provided in the instrument evidencing the option, the Board of Directors,
or the Committee, as the case may be, may permit any Optionee to transfer the
option during his lifetime to one or more members of his family, to one or more
trusts for the benefit of one or more members of his family or to one or more
entities owned solely by family members, provided that no consideration is paid
for the transfer and that such transfer would not result in the loss of any
exemption under Rule 16b-3 promulgated under the Securities Act of 1933, as
amended, for any option that the Board of Directors or the Committee, as the
case may be, does not permit to be so transferred. The transferee of an option
shall be subject to all restrictions, terms, and conditions applicable to the
option prior to its transfer, except that the option shall not be further
transferable inter vivos by the transferee. The Board of Directors or the
Committee, as the case may be, may impose on any transferable option and on the
Common Stock to be issued upon the exercise of the option such limitations and
conditions as the Board of Directors or the Committee, as the case may be, deems
appropriate.
10. Effect of Termination of Employment. For all purposes of the Plan and
any option or purchase right granted hereunder, "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations (or any successor regulations). No option may be exercised unless,
at the time of such exercise, the Optionee is, and has been continuously since
the date of grant of his or her option, employed by the Company or a subsidiary,
except that if and to the extent the option agreement so provides:
a. The option may be exercised within the period of three months after
the date the Optionee ceases to be an employee of any of the foregoing
entities (or within such shorter or longer period as may be specified or
provided for in the option agreement; provided, however, that the exercise of
the option shall not be less than thirty (30) days after the termination of
employment of the Optionee); provided, however, that in no event may an option
be exercised after the expiration date of the option.
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b. If the Optionee dies while in the employ of the Company, a Parent
Corporation or a Subsidiary or within three months after the Optionee ceases to
be such an employee, the option may be exercised by the person to whom it is
transferred by will or the laws of descent and distribution within the period of
one year after the date of death (or within such shorter or longer period as may
be specified or provided for in the option agreement or instrument, but in no
event shall the period be less than six (6) months after the date of death);
provided, however, that in no event may an option be exercised after the
expiration date of the option.
c. If the Optionee becomes "disabled" while in the employ of the
Company, a Parent Corporation or a Subsidiary, the option may be exercised
within the period of one year after the date the Optionee ceases to be an
employee of any of the foregoing entities because of such disability (or within
such shorter or longer period as may be specified or provided for in the option
agreement or instrument but in no event shall the period be less than six (6)
months after the date the Optionee ceases to be an employee because of such
disability); provided, however, that in no event may any option be exercised
after the expiration date of the option. For purposes of this Plan, the Optionee
shall be considered "disabled" if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment, which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of not less than twelve (12)
months.
11. Incentive Stock Options. Options granted under the Plan which are
intended to be Incentive Stock Options shall be specifically designated as
Incentive Stock Options and shall be subject to the following additional terms
and conditions:
a. Limitation. The aggregate fair market value (determined as of the
respective date or dates of grant) of the Common Stock which may be made the
subject of Incentive Stock Options granted under the Plan (and under any other
stock option plans of the Company, and any Parent Corporation and Subsidiary) to
any employee, which first become exercisable in any one calendar year shall not
exceed the sum of $100,000 or such greater amount as may be permitted under
subsequent amendments to the Code.
b. 10% Shareholder. If an employee to whom an Incentive Stock Option is
to be granted under the Plan is at the time of the grant of such option the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any Parent corporation or any
Subsidiary, then the purchase price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than one hundred ten percent
(110%) of the fair market value of one share of Common Stock of the Company at
the time of grant and the Incentive Stock Option shall have a maximum term of
five years.
c. Maximum Grant. No individual may be granted options in any calendar
year, whether an Incentive Stock Option or a non-qualified stock option, to
purchase more than 714,286 shares of Common Stock.
Except as modified by the preceding provisions of this Section 11, all
the provisions of the Plan shall be applicable to Incentive Stock Options
granted hereunder.
12. Rights as a Shareholder. The holder of an option shall have no
rights as a shareholder with respect to any shares covered by the option until
the date of issue of a stock certificate to him or her
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for such shares. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
13. Recapitalization. In the event that the outstanding shares of Common
Stock of the Company are changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, stock dividend, combination or
subdivision, appropriate adjustment shall be made in the number and kind of
shares available under the Plan and under any options granted under the Plan.
Such adjustment to outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options, and a corresponding
adjustment in the applicable option price per share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of any
option or a grant of additional benefits to the holder of an option.
14. Reorganization. In case the Company is merged or consolidated with
another corporation and the Company is not the surviving corporation, or in case
the acquiring corporation is not assuming the obligations of the Company with
respect to its outstanding options, or in the case all or substantially all of
the assets or more than fifty percent (50%) of the outstanding voting stock of
the Company is acquired by another corporation (unless all voting stock acquired
by said corporation is acquired directly from the Company), or in the case of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company, shall, as to outstanding options, either (i) make appropriate
provision for the protection of any such outstanding options by the substitution
on an equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation which will be issuable in
respect to the shares of Common Stock of the Company, provided that no
additional benefits shall be conferred upon Optionees or offerees as a result of
such substitution, and the excess of the aggregate fair market value of the
shares subject to the options immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the shares subject to such options immediately before such substitution
over the purchase price thereof, or (ii) upon written notice to the Optionees or
offerees, provide that all unexercised non-expired options granted under the
Plan shall immediately accelerate the Exercisability Date(s) to the date of
written notice and further all said options must be exercised within a specified
number of days (which shall not be less than thirty) of the date of such notice
or they will be terminated. In any such case, the Board of Directors may, in its
discretion, accelerate the Exercisability Date(s) of outstanding options.
15. No Special Employment Rights. Nothing contained in the Plan or in any
option granted under the Plan shall confer upon any option holder any right with
respect to the continuation of his or her employment by the Company (or any
Parent Corporation or Subsidiary) or interfere in any way with the right of the
Company (or any Parent Corporation or Subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board of
Directors at the time.
16. Other Employee Benefits. The amount of any compensation deemed to be
received by an employee as a result of the exercise of an option, or the sale of
shares received upon such exercise will not constitute "earnings" with respect
to which any other employee benefits of such employee are
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determined, including without limitation benefits under any pension, profit
sharing, life insurance or salary continuation plan.
17. Definition of Subsidiary. The term "Subsidiary" as used in the Plan
shall mean any corporation in an unbroken chain of corporations beginning with
the Company if each of the corporations other than the last corporation in the
unbroken chain 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.
18. Amendment of the Plan. The Board of Directors may at any time and
from time-to-time modify or amend the Plan in any respect, except that without
the approval of the shareholders of the Company, the Board of Directors may not
(a) materially increase the benefits accruing to individuals who participate in
the Plan, (b) materially increase the maximum number of shares which may be
issued under the Plan (except for permissible adjustments provided in the Plan),
(c) materially modify the requirements as to eligibility for participation in
the Plan or (d) modify or amend the Plan if shareholder approval is required
under Section 162(m) of the Code in order for any compensation related to
options granted under the Plan to not be subject to the limitation on
deductibility of Section 162(m). The termination or any modification or
amendment of the Plan shall not, without the consent of an Optionee, affect his
or her rights under an option previously granted to him or her. With the consent
of the Optionee affected, the Board of Directors may amend outstanding option
agreements in a manner not inconsistent with the Plan. The Board of Directors
shall have the right to amend or modify the terms and provisions of the Plan and
of any outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code.
19. Withholding. The Company's obligation to deliver shares upon the
exercise of any option granted under the Plan shall be subject to the option
holder's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
20. Effective Date and Duration of the Plan.
a. Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, any Incentive
Stock Options previously granted under the Plan shall terminate and no further
Incentive Stock Options shall be granted. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
b. Termination. Unless sooner terminated in accordance with Section 13,
the Plan shall terminate upon the earlier of (i) the close of business on
the day next preceding the tenth anniversary of the date of adoption by the
Board of Directors of this Amended and Restated 1992 Stock Option Plan, or (ii)
the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise or cancellation of options granted under
the Plan. If the date of termination is determined under (i) above, then options
outstanding on such date shall continue to have force and effect in accordance
with the provisions of the instruments evidencing such options.
