<PAGE> 1
As filed with the Securities and Exchange Commission on July 15, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ACTION PERFORMANCE COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
Arizona 86-0704792
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
4707 East Baseline Road
Phoenix, Arizona 85040
(Address of Principal Executive Offices)(Zip Code)
ACTION PERFORMANCE COMPANIES, INC.
1999 Employee Stock Purchase Plan
(Full Title of the Plan)
Fred W. Wagenhals
Chairman of the Board, President,
and Chief Executive Officer
ACTION PERFORMANCE COMPANIES, INC.
4707 East Baseline Road, Phoenix, Arizona 85040
(602) 337-3700
(Name, Address, and Telephone Number, Including Area Code,
of Agent for Service)
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will begin as soon as reasonably practicable after such effective date.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE PRICE REGISTRATION FEE
==================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock 500,000 Shares $ 35.00(2) $ 17,500,000 $ 4,865.00
==================================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1999 Employee Stock Purchase
Plan by reason of any stock dividend, stock split, recapitalization or any
other similar transaction without receipt of consideration which results
in an increase in the number of outstanding shares of Common Stock of
Action Performance Companies, Inc.
(2) Calculated for purposes of this offering under Rule 457(h) and Rule
457(c) of the Securities Act of 1933, as amended, using the average of
the high and low sales prices for the Common Stock of Action Performance
Companies, Inc. on July 7, 1999, as reported on the Nasdaq National
Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Action Performance Companies, Inc. (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Registrant's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or the latest prospectus filed
pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), that contains audited financial statements
for the Registrant's latest fiscal year for which such
statements have been filed;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the 1934 Act since the end of the fiscal year covered by the
document referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form 8-A/A (File
No. 001-11866) filed with the Commission on June 14, 1995.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement 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, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The firm of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association, Phoenix, Arizona, has acted as counsel for
the Registrant in the preparation of this Registration Statement. As of July 14,
1999, certain members of such firm beneficially owned a total of 14,000 shares
of the Registrant's Common Stock.
Item 6. Indemnification of Directors and Officers
The Registrant's Amended and Restated Articles of
Incorporation (the "Restated Articles") require the Registrant to indemnify and
advance expenses to any person who incurs liability or expense by reason of such
person acting as a director of the Corporation, to the fullest extent allowed by
the Arizona Business Corporation Act (the "Business Corporation Act"). This
indemnification is mandatory with respect to directors in all circumstances in
which indemnification is permitted by the Business Corporation Act, subject to
the requirements of the Business Corporation Act. In addition, the Registrant
may, in its sole discretion, indemnify and advance expenses, to the fullest
extent allowed by the Business Corporation Act, to any person who incurs
liability or expense by reason of such person acting as an officer, employee or
agent of the Registrant, except where indemnification is mandatory pursuant to
the Business Corporation Act, in which case the Registrant is required to
indemnify to the fullest extent required by the Business Corporation Act. The
effect of these provisions is described below.
II.1
<PAGE> 3
Required Indemnification
The Restated Articles and the Business Corporation Act require the
Registrant to indemnify all "Outside Directors," as defined below, and officers
of the Registrant who are not directors against "liability," as defined below.
The Restated Articles and the Business Corporation Act also require the
Registrant to indemnify against reasonable "expenses," as defined below, any
director who is the prevailing party in the defense of any proceeding to which
the director is a party because such person is or was a director of the
Registrant. In addition, the Business Corporation Act requires the Registrant to
pay expenses to Outside Directors in advance of a final disposition of the
proceeding if (1) the director furnishes to the Registrant a written affirmation
(an "Affirmation") of his or her good faith belief that (i) his or her conduct
was in good faith, (ii) he or she reasonably believed that the conduct was in
the best interests of the Registrant or at least not opposed to the Registrant's
best interests, and (iii) in the case of any criminal proceeding, he or she had
no reasonable cause to believe the conduct was unlawful (the "Standard of
Conduct"), and (2) the director provides the Registrant with a written
undertaking (an "Undertaking") to repay the advance if it ultimately is
determined that the director did not meet the Standard of Conduct. However, the
Business Corporation Act prohibits the Registrant from advancing expenses to an
Outside Director if a court determines before payment that the director failed
to meet the Standard of Conduct and a court does not otherwise authorize
indemnification.
The Restated Articles and the Business Corporation Act also require the
Registrant to indemnify a director who is not an Outside Director against
liability, but only if the Registrant is authorized in the specific case after a
determination has been made by either (a) a majority of the members of the Board
of Directors who are not at the time parties to the proceeding, (b) special
legal counsel, or (c) the shareholders of the Registrant (excluding shares owned
by or voted under the control of directors who are at the time parties to the
proceeding) that the director has met the Standard of Conduct (a
"Determination"). In addition, the Business Corporation Act prohibits the
Registrant from indemnifying a director who is not an Outside Director in
connection with a proceeding by or in the right of the Registrant in which the
director is adjudged liable to the Registrant, or in connection with a
proceeding in which the director was adjudged liable on the basis that the
director improperly received a personal benefit. As permitted by the Business
Corporation Act, the Restated Articles also require the Registrant to pay for or
reimburse the reasonable expenses of a director who is not an Outside Director
in advance of the final disposition of a proceeding if the director furnishes
the Registrant with an Affirmation, an Undertaking, and a Determination is made
that the facts then known to the persons making the Determination would not
preclude indemnification under the Business Corporation Act.
Optional Indemnification
Except for situations where the Registrant is required to indemnify its
officers who are not also directors against liability, as described above, the
Restated Articles and the Business Corporation Act permit the Registrant, in its
sole discretion, to indemnify against liability and advance expenses to any
officer, employee, or agent who is not a director to the same extent as to a
director. However, the Business Corporation Act prohibits the Registrant from
indemnifying such persons against liability unless a Determination is made that
indemnification is permissible because the person has met the Standard of
Conduct. The Business Corporation Act permits the Registrant to pay for or
reimburse expenses to an officer, employee, or agent who is not a director in
advance of a final disposition of the proceeding, but only if the person
furnishes to the Registrant an Affirmation and an Undertaking, and a
Determination is made that the facts then known to the persons making the
Determination would not otherwise preclude indemnification.
Court Ordered Indemnification
The Restated Articles and the Business Corporation Act permit a
director or officer of the Registrant to apply to a court for indemnification,
in which case the court may, subject to certain conditions, order the Registrant
to indemnify such person for part or all of the person's liability and expenses.
II.2
<PAGE> 4
Definitions
The Business Corporation Act defines "Outside Director" to mean a
director who, when serving as a director, was not an officer, employee or holder
of more than 5% of the outstanding shares of any class of stock of the
Registrant. "Liability" under the Business Corporation Act means the obligation
to pay a judgment, settlement, penalty or fine, including an excise tax assessed
with respect to an employee benefit plan, or reasonable expenses incurred with
respect to a proceeding and includes obligations and expenses that have not yet
been paid by the indemnified person but that have been or may be incurred. The
Business Corporation Act defines "expenses" as attorney fees and all other costs
and expenses reasonably related to a proceeding.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
5 Opinion and consent of O'Connor, Cavanagh, Anderson, Killingsworth
& Beshears, a professional association
10.56 1999 Employee Stock Purchase Plan
23.1 Consent of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
P.A. is contained in Exhibit 5
23.2 Consent of Independent Public Accountants - Arthur Andersen LLP
24 Power of Attorney (included on signature page of this Registration
Statement)
</TABLE>
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement 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.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining 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 that is incorporated by reference
into 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.
C. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers or
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
II.3
<PAGE> 5
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.
II.4
<PAGE> 6
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 Phoenix, State of Arizona, on this 7th day of
July, 1999.
ACTION PERFORMANCE COMPANIES, INC.
By: /s/ Fred W. Wagenhals
-------------------------------------------
Fred W. Wagenhals, Chairman of the Board,
President, and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints jointly and severally, Fred W.
Wagenhals and Christopher S. Besing and each of them, as his true and lawful
attorney-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 post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, 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 Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
--------- -------- ----
<S> <C> <C>
/s/ Fred W. Wagenhals Chairman of the Board, President, and July 7, 1999
- ------------------------------------ Chief Executive Officer (Principal Executive Officer)
Fred W. Wagenhals
/s/ Tod J. Wagenhals Executive Vice President, Secretary, and Director July 7, 1999
- ------------------------------------
Tod J. Wagenhals
/s/ Christopher S. Besing Vice President, Chief Financial Officer, Treasurer, and July 7, 1999
- ------------------------------------ Director (Principal Financial Officer)
Christopher S. Besing
/s/ David A. Husband Vice President - Finance and Accounting and Chief July 7, 1999
- ------------------------------------ Accounting Officer (Principal Accounting Officer)
David A. Husband
/s/ Melodee L. Volosin Vice President - Wholesale Division and Director July 7, 1999
- ------------------------------------
Melodee L. Volosin
/s/ John S. Bickford, Sr. Vice President - Strategic Alliances and Director July 7, 1999
- ------------------------------------
John S. Bickford, Sr.
</TABLE>
II.5
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Paul G. Lang Managing Director of MiniChamps and Director July 7, 1999
- ------------------------------------
Paul G. Lang
/s/ Jack M. Lloyd Director July 7, 1999
- ------------------------------------
Jack M. Lloyd
/s/ Robert H. Manschot Director July 7, 1999
- ------------------------------------
Robert H. Manschot
/s/ Edward J. Bauman Director July 7, 1999
- ------------------------------------
Edward J. Bauman
- ------------------------------------ Director July __, 1999
Gregory W. Penske
</TABLE>
II.6
<PAGE> 8
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
<S> <C>
5 Opinion and consent of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association
10.56 1999 Employee Stock Purchase Plan
23.1 Consent of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
P.A. is contained in Exhibit 5
23.2 Consent of Independent Public Accountants -- Arthur Andersen LLP
24 Power of Attorney (included on signature page of this Registration
Statement)
</TABLE>
<PAGE> 1
EXHIBIT 5
[O'CONNOR CAVANAGH LETTERHEAD]
The Law Offices of
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears
A Professional Association
July 14, 1999
Action Performance Companies, Inc.
4707 East Baseline Road
Phoenix, Arizona 85040
RE: REGISTRATION STATEMENT ON FORM S-8
ACTION PERFORMANCE COMPANIES, INC.
Gentlemen:
As legal counsel to Action Performance Companies, Inc., an
Arizona corporation (the "Company"), we have assisted in the preparation of the
Company's Registration Statement on Form S-8 (the "Registration Statement") to
be filed with the Securities and Exchange Commission on or about July 15, 1999
in connection with the registration under the Securities Act of 1933, as
amended, of 500,000 shares of the Company's common stock, par value $0.01 per
share, (the "Common Stock") issuable pursuant to the Company's 1999 Employee
Stock Purchase Plan (the "Plan"). The shares of Common Stock issuable pursuant
to the Plan are referred to as the "Shares." The facts, as we understand them,
are set forth in the Registration Statement.
With respect to the opinion set forth below, we have examined
originals, certified copies, or copies otherwise identified to our satisfaction
as being true copies, only of the following:
A. The Amended and Restated Articles of Incorporation of the
Company, as filed with the Secretary of State of the State of Arizona, as
amended through the date hereof;
B. The Bylaws of the Company, as amended through the date
hereof;
C. Resolutions of the Board of Directors of the Company dated
January 29, 1999, reserving the Shares for issuance pursuant to the Plan; and
<PAGE> 2
Action Performance Companies, Inc.
July 14, 1999
Page 2
D. The Registration Statement.
Subject to the assumptions that (i) the documents and
signatures examined by us are genuine and authentic and (ii) the persons
executing the documents examined by us have the legal capacity to execute such
documents, and subject to the further limitations and qualifications set forth
below, it is our opinion that the Shares, when issued and sold in accordance
with the terms of the Plan, will be validly issued, fully paid and
nonassessable.
Please be advised that we are members of the State Bar of
Arizona, and our opinion is limited to the legality of matters under federal
securities laws and the laws of the State of Arizona. Further, our opinion is
based solely upon existing laws, rules and regulations, and we undertake no
obligation to advise you of any changes that may be brought to our attention
after the date hereof.
We hereby expressly consent to any reference to our firm in
the Registration Statement, inclusion of this Opinion as an exhibit to the
Registration Statement, and to the filing of this Opinion with any other
appropriate governmental agency.
Very truly yours,
/s/ O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
2
<PAGE> 1
EXHIBIT 10.56
ACTION PERFORMANCE COMPANIES, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS AS OF JANUARY 29, 1999
APPROVED BY THE SHAREHOLDERS ON MARCH 25, 1999
AS AMENDED BY THE BOARD OF DIRECTORS ON APRIL 26, 1999
ARTICLE 1
PURPOSE
1.1 NAME. This stock purchase plan shall be known as the Action
Performance Companies, Inc. 1999 Employee Stock Purchase Plan (the "Plan").
1.2 PURPOSE. The Plan is intended to provide a method whereby employees
of Action Performance Companies, Inc., an Arizona corporation (the "Company"),
and one or more of its Subsidiary Corporations (as defined below) will have an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the Company's Common Stock.
1.3 QUALIFICATION. It is the Company's intention to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Code (as
defined below). The provisions of the Plan shall be construed so as to extend
and limit participation in a manner consistent with the requirements of Section
423 of the Code.
ARTICLE 2
DEFINITIONS
2.1 CLOSING PRICE. "Closing Price" shall have the meaning set forth in
Section 6.2.
2.2 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.3 COMMITTEE. "Committee" shall have the meaning set forth in Section
11.1.
2.4 COMMON STOCK. "Common Stock" shall mean the Company's Common Stock,
par value $.01 per share.
2.5 COMPENSATION. "Compensation" shall mean the regular gross cash
compensation (including straight-time wages, base salary, or base commissions)
paid by any Participating Company to a Participant in accordance with the terms
of employment, but excluding all overtime, bonus payments, incentive payments,
expense allowances, and compensation paid in a form other than cash.
2.6 EFFECTIVE DATE. "Effective Date" shall have the meaning set forth
in Section 12.6.
2.7 EMPLOYEE. "Employee" shall mean any person who is customarily
employed on a full-time or part-time basis by any Participating Company and who
is regularly scheduled to work 20 hours or more per week.
2.8 OFFERING. "Offering" shall have the meaning set forth in Section
4.1.
2.9 OFFERING COMMENCEMENT DATE. "Offering Commencement Date" shall have
the meaning set forth in Section 4.1.
<PAGE> 2
2.10 OFFERING TERMINATION DATE. "Offering Termination Date" shall have
the meaning set forth in Section 4.1.
2.11 OPTION. "Option" shall have the meaning set forth in Section 6.1.
2.12 OPTION PRICE. "Option Price" shall have the meaning set forth in
Section 6.2.
2.13 PARTICIPATING COMPANY. "Participating Company" shall mean (a) the
Company, (b) the Subsidiary Corporations listed on Schedule A hereto, (c) such
additional Subsidiary Corporations as may be designated from time to time by the
Board of Directors of the Company, and (d) any corporation organized within any
jurisdiction in the United States that becomes a Subsidiary Corporation after
the Effective Date, unless the Board of Directors decides to exclude such
Subsidiary Corporation from designation as a Participating Company. Any
corporation organized in any jurisdiction outside the United States that becomes
a Subsidiary Corporation after the Effective Date shall become a Participating
Company only upon the decision of the Board of Directors of the Company to
designate such Subsidiary Corporation as a Participating Company and to extend
the benefits of the Plan to its eligible Employees.
2.14 PARTICIPANT. "Participant" shall have the meaning set forth in
Section 3.4.
2.15 PARTICIPATION AMOUNT. "Participation Amount" shall have the
meaning set forth in Section 5.1.
2.16 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any
present or future corporation that would be a "subsidiary corporation" of the
Company, as that term is defined in Section 424 of the Code.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY. Any Employee who shall have completed six
months of continuous employment with a Participating Company and is employed by
a Participating Company on the date such Employee's participation in the Plan is
to become effective shall be eligible to participate in Offerings under the Plan
that commence on or after such six-month employment period has concluded. In the
event a Participating Company acquires a company that becomes a Participating
Company as a result of such acquisition, the employees of such acquired company
shall be regarding as having an employment start date as of the date when they
began continuous employment with the acquired company.
3.2 LEAVE OF ABSENCE. For purposes of participation in the Plan, a
person on leave of absence shall be deemed to be an Employee for the first 90
days of such leave of absence and such Employee's employment shall be deemed to
have terminated at the close of business on the 90th day of such leave of
absence unless such Employee shall have returned to regular full-time or
part-time employment (as the case may be) prior to the close of business on such
90th day. Termination by a Participating Company of any Employee's leave of
absence, other than termination of such leave of absence on return to full time
or part time employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and right to exercise any Option.
3.3 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of the
Plan to the contrary, no Employee shall be granted an Option to purchase shares
of Common Stock under the Plan:
(a) if, immediately after the grant, such Employee would own
Common Stock, and/or hold outstanding Options to purchase Common Stock,
possessing 5% or more of the total combined voting power or value of all classes
of Common Stock of the Company (for purposes of this paragraph, the rules of
Section 424(d) of the Code shall apply in determining Common Stock ownership of
any Employee); or
2
<PAGE> 3
(b) which permits such Employee's rights to purchase Common
Stock under all employee stock purchase plans of the Company to accrue at a rate
that exceeds $25,000 in fair market value of the Common Stock (determined at the
time such Option is granted) for each calendar year in which such Option is
outstanding.
3.4 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
participant ("Participant") by completing the enrollment forms prescribed by the
Committee (including a purchase agreement and a payroll deduction authorization)
and filing such forms with the designated office of the Company prior to the
Offering Commencement Date for the next scheduled Offering. Payroll deductions
for a Participant shall commence on the next scheduled Offering Commencement
Date after such Participant's authorization of a payroll deduction becomes
effective and shall continue in effect for the term of this Plan, except to the
extent such payroll deduction is changed in accordance with Section 5.3 or
terminated in accordance with Article 8.
ARTICLE 4
OFFERINGS
4.1 ANNUAL OFFERINGS. Except as described below with respect to the
first year that the Plan is in effect, the Plan will be implemented by offerings
("Offerings") of the Company's Common Stock in two six-month offering periods
for each year that the Plan is in effect. During the first year that the Plan is
in effect, the Plan will provide for an Offering beginning on August 1, 1999 and
ending on January 31, 2000. Thereafter, in the nine following years beginning on
February 1, 2000 and ending January 31, 2009, the Plan will provide for two
six-month Offerings commencing on February 1 and August 1 of each year and
ending on the following July 31 or January 31, as applicable. As used in the
Plan, "Offering Commencement Date" means the date on which a particular Offering
begins and "Offering Termination Date" means the date on which a particular
Offering terminates. Subject to any limitations imposed by the Code, the
Committee may, in its discretion, designate a longer or shorter term for any
Offering (other than to extend the final Offering beyond January 31, 2009) by
giving written notice to the Participants prior to the Offering Commencement
Date for such Offering.
ARTICLE 5
PAYROLL DEDUCTIONS
5.1 PAYROLL DEDUCTIONS. At the time an Employee files an authorization
for payroll deductions and becomes a Participant in the Plan, the enrollment
forms described in Section 3.4 will permit the Employee to elect payroll
deductions of zero percent (0%) or any whole percentage point from one percent
(1%) through fifteen percent (15%) of such Employee's Compensation for each pay
period during an Offering; provided, however, that prior to any Offering
Commencement Date, the Committee shall have the discretion to limit payroll
deductions to less than 15 percent (15%) for any Offering.
5.2 PARTICIPANT'S ACCOUNT. All payroll deductions made for a
Participant pursuant to this Article 5 shall be credited to such Participant's
payroll deduction account under the Plan. A Participant may not make any
separate cash payment into such account except when on leave of absence and then
only as provided in Section 5.4.
5.3 CHANGES IN PAYROLL DEDUCTIONS. A Participant may discontinue
participation in the Plan as provided in Article 8 and may reduce or increase
future payroll deductions (within the limits described in Section 5.1 by filing
a form provided by the Company for such purpose, provided that a Participant may
not make more than two changes to the amount of his or her payroll deductions
during any Offering. The effective date of any increase or reduction in future
payroll deductions will be the first day of the next pay period succeeding
processing by the Company of the change form.
5.4 LEAVE OF ABSENCE. If a Participant is on a leave of absence, such
Participant shall have the right to elect (a) to withdraw the balance in such
Participant's payroll deduction account pursuant to Section 8.1 hereof, or (b)
to remain a Participant in the Plan but to discontinue contributions to the
Plan, or (c) to remain a Participant in
3
<PAGE> 4
the Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence and
undertaking to make cash payments to the Plan at the end of each payroll period
to the extent that amounts payable by the Participating Company to such
Participant are insufficient to meet such Participant's then-authorized payroll
deductions.
ARTICLE 6
GRANTING OF OPTION
6.1 NUMBER OF OPTION SHARES. On each Offering Commencement Date, a
Participant shall be deemed to have been granted an option ("Option") to
purchase the whole number of shares of Common Stock determined by dividing (a)
the amount of such Participant's payroll deductions accumulated during such
Offering and credited to such Participant's account as of the Offering
Termination Date, by (b) the Option Price, determined as provided in Section
6.2, below.
6.2 OPTION PRICE. The "Option Price" of Common Stock for each Offering
shall be the lower of (a) 85% of the Closing Price of the Common Stock on the
Offering Commencement Date, or (b) 85% of the Closing Price of the Common Stock
on the Offering Termination Date. The "Closing Price" of the Common Stock as to
a particular day shall be the closing price of the Common Stock as reported for
such day in The Wall Street Journal or in such other source as the Committee
deems reliable. If the Common Stock is not traded on the Nasdaq National Market
or other principal exchange or market on which it is authorized or listed for
trading on the Offering Commencement Date and/or Offering Termination Date, as
the case may be, the Closing Price for the Common Stock as to either of such
dates on which such trading did not occur shall be the Closing Price on the
nearest prior business day on which trading did occur.
ARTICLE 7
EXERCISE OF OPTION
7.1 AUTOMATIC EXERCISE. Unless a Participant gives written notice to
the Company as provided in Section 8.1, such Participant's Option for the
purchase of Common Stock with payroll deductions made during any Offering will
be deemed to have been exercised automatically on the applicable Offering
Termination Date for the purchase of the number of full shares of Common Stock
that the accumulated payroll deductions in such Participant's account at that
time will purchase at the applicable Option Price (but not in excess of the
number of shares for which Options have been granted to the Employee pursuant to
Section 6.1 hereof).
7.2 FRACTIONAL SHARES. Fractional shares will not be issued under the
Plan. Any accumulated payroll deductions that would have been used to purchase
fractional shares will be, at the option of the Committee, either (a) returned
(without interest) to the Participant promptly following the termination of an
Offering, or (b) added to the payroll deduction account for such Participant and
held for the purchase of Common Stock in connection with the next Offering;
provided, however, that such amount (without interest) shall be refunded to any
Participant who provides the Company with a written request for a refund prior
to the use of such amount to purchase Common Stock at the end of the next
Offering.
7.3 TRANSFERABILITY OF OPTION. During a Participant's lifetime, Options
held by such Participant shall be exercisable only by such Participant.
7.4 DELIVERY OF STOCK. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each Participant,
as appropriate, the shares of Common Stock purchased upon exercise of such
Participant's Option. The Company may deliver such shares in certificated or
book entry form, at the Company's sole election.
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ARTICLE 8
WITHDRAWAL
8.1 IN GENERAL. At any time prior to the last five days of an Offering,
a Participant may withdraw all, but not less than all, of the payroll deductions
credited to such Participant's payroll deduction account under the Plan by
giving written notice to the designated office of the Company, which withdrawal
notice shall be in such form as determined by the Committee. All of the
Participant's payroll deductions credited to the Participant's account shall be
paid to the Participant promptly after receipt of such Participant's notice of
withdrawal, and no further payroll deductions shall be made from the
Participant's pay during such Offering or during any subsequent Offering unless
the Participant re-enrolls as provided in Section 8.2 hereof. The Company may,
at its option, treat any attempt by a Participant to borrow on the security of
such Participant's accumulated payroll deductions as an election to withdraw
such deductions.
8.2 EFFECT ON SUBSEQUENT PARTICIPATION. An Employee's withdrawal from
any Offering shall not have any effect upon such Employee's eligibility to
participate in any succeeding Offering or in any similar plan that may hereafter
be adopted by the Company. In order to be eligible for a subsequent Offering,
however, an Employee who has withdrawn from an Offering must satisfy the
requirements of Section 3.4 hereof prior to the Offering Commencement Date of
such subsequent Offering.
8.3 TERMINATION OF EMPLOYMENT. Upon termination of a Participant's
employment with any and all Participating Companies for any reason, including
retirement (but excluding death or permanent disability within the meaning of
Section 22(e)(3) of the Code (as determined by the Committee) while in the
employ of a Participating Company or continuation of a leave of absence for a
period beyond 90 days), the payroll deductions credited to such Participant's
account shall be returned to the Participant, or, in the case of the
Participant's death subsequent to the termination of such Participant's
employment, to the person or persons entitled thereto under Section 12.1 hereof.
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABLEMENT. Upon
termination of a Participant's employment as a result of death or permanent
disability within the meaning of Section 22(e)(3) of the Code (as determined by
the Committee), the Participant or Participant's beneficiary (as defined in
Section 12.1 hereof) shall have the right to elect, by written notice given to
the designated office of the Company prior to the earlier of the Offering
Termination Date of the Offering then in effect or the expiration of a period of
60 days commencing with the termination of the Participant's employment, either:
(a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan; or
(b) to exercise the Participant's Option on the next Offering
Termination Date and purchase the number of full shares of Common Stock that the
accumulated payroll deductions in the Participant's payroll deduction account as
of the date of the Participant's cessation of employment will purchase at the
applicable Option Price, and any excess in such account will be returned to said
beneficiary, without interest.
In the event that no such written notice of election shall be duly received by
the designated office of the Company, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the Participant's
Option.
8.5 LEAVE OF ABSENCE. A Participant on leave of absence shall, subject
to the election made by such Participant pursuant to Section 5.4 hereof,
continue to be a Participant in the Plan so long as such Participant is on
continuous leave of absence. A Participant who has been on leave of absence for
more than 90 days and who therefore is not an Employee for the purpose of the
Plan shall not be entitled to participate in any Offering commencing after the
90th day of such leave of absence. Notwithstanding any other provisions of the
Plan, unless a Participant on leave of absence returns to regular full time or
part time employment with a Participating Company
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by the earlier of (a) the termination of such leave of absence, or (b) three
months after the 90th day of such leave of absence, such Participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
ARTICLE 9
INTEREST
9.1 PAYMENT OF INTEREST. No interest will be paid or allowed on any
money paid into the Plan or credited to the payroll deduction account of any
Participant, including any interest paid on any and all money which is
distributed to a Participant or such Participant's beneficiary pursuant to any
of the provisions of the Plan.
ARTICLE 10
COMMON STOCK SUBJECT TO THE PLAN
10.1 MAXIMUM SHARES. Subject to adjustment upon changes in
capitalization of the Company as provided in Section 12.4 hereof, the maximum
number of shares of Common Stock that may be issued under the Plan shall be
200,000 shares, plus an automatic annual increase to be added on the first day
of each fiscal year beginning with the Company's fiscal year beginning on
October 1, 2001. The automatic annual increase shall be equal to the lesser of
(i) 200,000 shares or (ii) 1.0% of the outstanding shares on the last day of the
Company's prior fiscal year; provided, however, that the Board of Directors, in
its sole and unrestricted discretion, shall be entitled to reduce the number of
shares of Common Stock to be added to the Plan for any year under this Section
10.1. If the total number of shares for which Options are exercised on any
Offering Termination Date in accordance with Article 6 exceeds the maximum
number of shares available under the Plan, the Committee shall make a pro rata
allocation of the shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as the Committee shall determine to
be equitable, and the balance of payroll deductions credited to the account of
each Participant under the Plan shall be returned to such Participant as
promptly as possible.
10.2 PARTICIPANT'S INTEREST IN OPTION STOCK. A Participant will have no
interest in shares of Common Stock covered by such Participant's Option until
such Option has been exercised.
10.3 REGISTRATION OF STOCK. Shares of Common Stock to be delivered to a
Participant under the Plan will be registered in the name of the Participant,
or, if the Participant so directs by written notice to the designated office of
the Company prior to the Offering Termination Date applicable thereto, in the
names of the Participant and the Participant's spouse, in the form and manner
permitted by applicable law.
10.4 RESTRICTIONS ON EXERCISE. As conditions to the exercise of any
Option, the Board of Directors may, in its discretion, require that the shares
of Common Stock reserved for issuance upon the exercise of such Option shall
have been duly listed for trading on the Nasdaq National Market or other
principal exchange or market on which the Common Stock is authorized or listed
for trading, and that either:
(a) a registration statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective; or
(b) the Participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is such
Participant's intention to purchase the shares of Common Stock for investment
and not for resale or distribution.
ARTICLE 11
ADMINISTRATION
11.1 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a
committee (the "Committee") to administer the Plan, which shall consist of no
fewer than two (2) members of the Board of
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Directors. Members of the Committee who are Employees shall be eligible to
purchase Common Stock under the Plan.
11.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority, in its discretion, to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination regarding the foregoing matters shall be conclusive. The Committee
may delegate its authority as it deems necessary or appropriate.
11.3 RULES GOVERNING ADMINISTRATION OF THE COMMITTEE. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. All determinations of the
Committee shall be made by a majority of its members. The Committee may correct
any defect or omission or reconcile any inconsistency in the Plan, in the manner
and to the extent it shall deem desirable. Any decision or determination reduced
to writing and signed by a majority of the members of the Committee shall be as
fully effective as if it had been made by a majority vote at a meeting duly
called and held. The Committee may appoint a secretary and shall make such rules
and regulations for the conduct of its business as it shall deem advisable.
ARTICLE 12
MISCELLANEOUS
12.1 DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary who is to receive any shares of Common Stock and/or
cash under the Plan upon such Participant's death. Such designation of
beneficiary may be changed by the Participant at any time by written notice to
the designated office of the Company. Upon the death of a Participant and upon
receipt by the Company of proof of identity and existence at such Participant's
death of a beneficiary validly designated by the Participant under the Plan, the
Company shall deliver such shares of Common Stock and/or cash to such
beneficiary. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares of Common Stock
and/or cash to the executor or administrator of the estate of such Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares of Common
Stock and/or cash to the spouse or to any one or more dependents of such
Participant as the Company may designate, in each case without any further
liability of the Company whatsoever. No beneficiary shall, prior to the death of
the Participant by whom such beneficiary has been designated, acquire any
interest in the shares of Common Stock and/or cash credited to such Participant
under the Plan.
12.2 TRANSFERABILITY. Neither payroll deductions credited to a
Participant's payroll deduction account nor any rights with regard to an Option
granted under the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way by the Participant, other than by will or the laws of
descent and distribution. Any such attempted assignment, transfer, pledge or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw from participation in the Plan in accordance
with Article 8.
12.3 USE OF FUNDS. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose.
The Company shall not be obligated to segregate such payroll deductions.
12.4 Adjustment Upon Changes in Capitalization.
(a) If, while any Options are outstanding, the outstanding
shares of Common Stock of the Company have increased, decreased, changed into,
or been exchanged for a different number or type of shares
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or securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split (whether or not effected in the form of a stock
dividend), reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number and/or type
of shares of stock that are subject to purchase under outstanding Options and to
the Option Price applicable to such outstanding Options. In addition, in any
such event, the number and/or type of shares of stock which may be offered in
the Offerings described in Article 4 hereof shall also be proportionately
adjusted.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the assets or stock of the
Company, the holder of each Option then outstanding under the Plan will
thereafter be entitled to receive at the next Offering Termination Date, upon
the exercise of such Option, for each share as to which such Option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property that a holder of one share of Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the directors shall deem
necessary to assure that the provisions of this Section 12.4 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which such holder of such Option might
thereafter be entitled to receive.
12.5 AMENDMENT AND TERMINATION. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the shareholders
of the Company, (a) increase the maximum number of shares of Common Stock that
may be issued under the Plan (except pursuant to Section 12.4 hereof); or (b)
amend the requirements as to the class of Employees eligible to purchase Common
Stock under the Plan. No termination, modification, or amendment of the Plan
may, without the consent of a Participant then holding an Option under the Plan
to purchase shares of Common Stock, adversely affect the rights of such
Participant under such Option.
12.6 EFFECTIVE DATE. The Plan shall become effective as of January 31,
1999 (the "Effective Date"), subject to approval by the holders of a majority of
the shares of Common Stock present and represented at any special or annual
meeting of the shareholders of the Company duly held within 12 months after
adoption of the Plan. If the Plan is not so approved, the Plan shall not become
effective, any options to purchase shares of Common Stock under the Plan shall
be terminated, and no shares of Common Stock shall be issued under the Plan.
12.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create in any Employee or class of Employees any right with respect to
continuation of employment by any Participating Company and it shall not be
deemed to interfere in any way with any Participating Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.8 EFFECT OF PLAN. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
12.9 GOVERNING LAW. The law of the State of Arizona will govern all
matters relating to this Plan except to the extent it is superseded by the
federal laws of the United States.
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EXHIBIT 23.2
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 November 13, 1998,
except with respect to matters discussed in Note 12 to the Company's financial
statements as to which the date is December 1, 1998, included in Action
Performance Companies, Inc.'s Form 10-K/A for the year ended
September 30, 1998, and to all references to our firm included in this
registration statement.
Phoenix, Arizona /s/ ARTHUR ANDERSEN LLP
July 8, 1999
