<PAGE> 1
As filed with the Securities and Exchange Commission on November 10, 1997
Registration No.
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
LCI INTERNATIONAL, INC.
(Exact name of issuer as specified in its charter)
Delaware 13-3498232
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8180 Greensboro Drive, Suite 800, McLean, Virginia 22102
-----------------
(Address of Principal Executive Offices and Zip Code)
1997/1998 LCI INTERNATIONAL, INC.
STOCK OPTION PLAN
------------------------
(Full title of the plan)
H. Brian Thompson
Chairman and Chief Executive Officer
LCI International, Inc.
8180 Greensboro Drive, Suite 800
McLean, Virginia 22102
---------------------------------------
(Name and address of agent for service)
(703) 442-0220
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Title of Securities to Amount to be Proposed Maximum Proposed Maximum Amount of
be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Share (1) Price (1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 3,000,000 Shares $26.69 $80,070,000 $24,263.64
===============================================================================================================================
</TABLE>
(1) Estimated solely for purpose of determining the registration fee based on
the average of the high and low prices on November 3, 1997 pursuant to Rule
457(h) of the Securities Act of 1933.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM
- ----
3 INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are
incorporated by reference in this Registration Statement, except
to the extent that any statement or information contained therein
is modified, superseded or replaced by a statement or information
contained in any subsequently filed document incorporated herein
by reference:
(a) The description of the Registrant's Common Stock, par value
$.01 per share (the "Common Stock"), contained in the
Registrant's registration statement on Form 8-A filed under
the Securities Exchange Act of 1934 (the "Exchange Act")
and any amendments or reports filed for the purpose of
updating such description.
(b) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (as amended by the Form 10K/A
filed on June 6, 1997) filed pursuant to Section 13 or
15(d) of the Exchange Act.
(c) The Registrant's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 (as amended by the Form
10-Q/A filed on June 17, 1997) and June 30, 1997.
(d) The Registrant's Current Report on Form 8-K dated January
23, 1997, June 6, 1997, June 17, 1997, June 20, 1997, June
26, 1997, and September 23, 1997.
(e) All documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities
offered hereby have been sold or which deregisters all such
securities remaining unsold.
4 DESCRIPTION OF SECURITIES
Not applicable
5 INTERESTS OF NAMED EXPERTS AND COUNSEL
Lee M. Weiner, whose legal opinion is filed as an exhibit hereto,
is Vice President and General Counsel of the Registrant.
6 INDEMNIFICATION OF DIRECTORS AND OFFICERS
<PAGE> 3
Section 145 of the Delaware General Corporation Law ("DGCL")
empowers a Delaware corporation to indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason
of the fact that such person is or was a director, officer,
employee or agent of such corporation, or is or was serving at
the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. A corporation may
indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A corporation may, in advance of the final
disposition of any civil, criminal, administrative or
investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer or director
in defending such action, provided that the director or officer
undertake to repay such amount if it shall be ultimately
determined that he is not entitled to be indemnified by the
corporation.
A Delaware corporation may indemnify officers and directors in an
action by or in the right of the corporation to procure a
judgment in its favor under the same conditions, except that no
indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses (including
attorneys' fees) which he actually and reasonably incurred in
connection therewith. The indemnification provided is not deemed
to be exclusive of any other rights to which an officer or
director may be entitled under any corporation's by-laws,
agreement, vote or otherwise.
Article X of the Amended and Restated Certificate of
Incorporation of LCI International, Inc. reads as follows:
1. A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit. If the
Delaware General Corporation Law is amended after approval by the
stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
<PAGE> 4
2. (a) Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding") (including an action by or in the right of the
Corporation), by reason of the fact that he is or was serving as
a director or officer of the Corporation (or is or was serving at
the request of the Corporation in a similar capacity with another
entity, including employee benefit plans), shall be indemnified
and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law. This
indemnification will cover all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes
or penalties and settlement amounts) reasonably incurred by the
director or officer in connection with a proceeding. All such
indemnification shall continue as to a director or officer who
has ceased to be a director or officer and shall continue to the
benefit of such director's or officer's heirs, executors and
administrators. Except as provided in paragraph (b) hereof with
respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such director or officer only if
such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred by this
Section shall be a contract right and shall include the right to
be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"). If the Delaware General
Corporation Law requires, an advancement of expenses incurred by
a director in his capacity as a director or an officer in his
capacity as an officer shall be made only upon delivery to the
Corporation of an undertaking by such director or officer to
repay all amounts so advanced if it is ultimately determined by
final judicial decision that such director or officer is not
entitled to be indemnified for such expenses under this Section
or otherwise (hereinafter an "undertaking").
(b) If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within ninety days after receipt of a
written claim, the director or officer may bring suit against the
Corporation to recover the unpaid amount. (In the case of a claim
for advancement of expenses, the applicable period will be twenty
days.) If successful in any such suit, the director or officer
will also be entitled to be paid the expense of prosecuting such
suit. In any suit brought by the director or officer to enforce a
right to indemnification hereunder (but not in a suit brought by
the director or officer to enforce a right to an advancement of
expenses) it shall be a defense that the director or officer has
not met the applicable standard of conduct under the Delaware
General Corporation Law. In any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an
undertaking, it shall be entitled to recover such expenses upon a
final adjudication that the director or officer has not met the
applicable standard of conduct set forth in the Delaware General
Corporation Law. Neither the failure of the Board of Directors of
the Corporation to determine prior to the commencement of such
suit that the director or officer has met the applicable standard
of conduct for indemnification set forth in the Delaware General
Corporation Law, nor an actual determination by the Board of
Directors of the Corporation that the director or officer has not
met such applicable standard of conduct, shall create a
presumption that the director or officer has not met the
applicable standard of conduct or, in the case of such a suit
brought by the director or officer, be a defense to such suit. In
any suit brought by the director or officer to enforce a right
hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of
proving that the director or officer is not entitled to be
<PAGE> 5
indemnified or to such advancement of expenses under this Section
or otherwise shall be on the Corporation.
(c) The rights to indemnification and to the advancement of
expenses conferred in this Section will not be exclusive of any
other right which any person may have or hereafter acquire under
any statute, this Amended and Restated Certificate of
Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of
the Corporation or other entity against any expense, liability or
loss, whether or not the Corporation would have the power to
indemnify such person under the Delaware General Corporation Law.
(e) The Corporation may, if authorized by the Board of Directors,
grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the same
extent as for directors and officers of the Corporation.
The Registrant maintains a directors' and officers' liability
insurance policy. As Warburg, Pincus Capital Company, L.P.
("Warburg") nominees to the Board of Directors of the Registrant,
Messrs. Vogelstein and Karp are entitled to indemnification by
Warburg for liabilities incurred in connection with acting on
behalf of Warburg.
7 EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable
8 EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
5 Legal Opinion of Lee M. Weiner, Vice President and General Counsel.
23 Consent of Arthur Andersen LLP.
99 1997/1998 LCI International, Inc. Stock Option Plan.
</TABLE>
<PAGE> 6
9 UNDERTAKINGS
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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement:
Provided, however, that paragraphs (l)(i) and (l)(ii) above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference 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.
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 l5 (d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
<PAGE> 7
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 Act and will be governed by the final adjudication of such
issue.
<PAGE> 8
SIGNATURES
The Registrant. 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 McLean, Commonwealth of Virginia, on November 10,
1997.
LCI INTERNATIONAL, INC.
By: /s/ H. Brian Thompson
------------------------------------
H. Brian Thompson
Chairman and Chief Executive Officer
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
date indicated.
<TABLE>
<S> <C> <C>
/s/ H. Brian Thompson Chairman of the Board November 10, 1997
- --------------------- Chief Executive Officer and Director ----------------
H. Brian Thompson (principal executive officer) (Date)
/s/ Joseph A. Lawrence Executive Vice President November 10, 1997
- ---------------------- and Chief Financial Officer ----------------
Joseph A. Lawrence (principal financial and accounting officer) (Date)
/s/ Richard E. Cavanagh Director November 10, 1997
- ----------------------- ----------------
Richard E. Cavanagh (Date)
/s/ William F. Connell Director November 10, 1997
- ---------------------- ----------------
William F. Connell (Date)
/s/ Julius W. Erving, II Director November 10, 1997
- ------------------------- ----------------
Julius W. Erving, II (Date)
/s/ Douglas M. Karp Director November 10, 1997
- ------------------- ----------------
Douglas M. Karp (Date)
/s/ George M. Perrin Director November 10, 1997
- -------------------- ----------------
George M. Perrin (Date)
/s/ John L. Vogelstein Director November 10, 1997
- ---------------------- ----------------
John L. Vogelstein (Date)
</TABLE>
<PAGE> 9
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of McLean, Commonwealth of
Virginia, on November 10, 1997.
1997/1998 LCI International, Inc.
Stock Option Plan
By: /s/ Joseph A. Lawrence
-------------------------------
Joseph A. Lawrence
Executive Vice President
and Chief Financial Officer
<PAGE> 1
EXHIBIT 5
November 7, 1997
LCI International, Inc.
8180 Greensboro Drive, Suite 800
McLean, Virginia 22102
Gentlemen:
You have requested my opinion, as counsel for LCI International, Inc. and/or
its subsidiaries (the "Company"), in connection with the Registration Statement
on Form S-8 to be filed by the Company with the Securities and Exchange
Commission (the "Registration Statement") in connection with the registration
under the Securities Act of 1933, as amended, by the Company of 3,000,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), which
shares are issuable upon exercise of stock options granted or to be granted
under the 1997/1998 LCI International, Inc. Stock Option Plan ("the Plan").
I have examined and relied upon originals or copies, certified, or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates and instruments relating to the Company as I have deemed relevant
and necessary to the information of the opinion hereinafter set forth. In such
examination, I have assumed the genuineness and authenticity of all documents
examined by me and all signatures thereon, the legal capacity of all persons
executing such documents, the conformity to originals of all copies of
documents submitted to me and the truth and correctness of any representations
and warranties contained therein.
Based upon and subject to the foregoing and to such further limitations and
qualifications as set forth below, we are of the opinion that:
The Common Stock, when issued in accordance with the
terms of the Plan, will be legally issued, fully paid
and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Lee. M. Weiner
Lee M. Weiner
Vice President and General Counsel
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into this registration statement of our reports dated February 6,
1997 included in and incorporated by reference in LCI International, Inc.'s
Form 10-K and amended Annual Report on Form 10K/A, for the year ended December
31, 1996, and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Washington, D.C.,
November 6, 1997
<PAGE> 1
EXHIBIT 99
1997/1998 LCI INTERNATIONAL, INC. STOCK OPTION PLAN
1. PURPOSES.
The 1997/1998 LCI International, Inc. Stock Option Plan (the "Plan")
is intended to attract and retain the best available personnel for positions of
substantial responsibility with LCI International, Inc., a Delaware corporation
(the "Company"), LCI International Management Services, Inc. ("LCI"), or any
other subsidiary corporations of the Company, and to provide additional
incentive to such persons to exert their maximum efforts toward the success of
the Company and its subsidiary corporations. The above aims will be
effectuated through the granting of certain stock options ("Options"). Under
the Plan, the Company may grant "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or Options which are not intended to be ISOs ("Non-Qualified
Options").
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee (the "Committee")
consisting of at least two persons, appointed by the Board of Directors of the
Company (the "Board of Directors"), each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 (the "Exchange Act"). The Committee may exercise the power and authority
vested in the Board of Directors under the Plan. In administering the Plan,
the Committee shall follow any general guidelines not inconsistent with the
Plan established by the Board of Directors and may adopt rules and regulations
for carrying out the Plan. Within the limits of the express provisions of the
Plan, the Committee shall have the authority, in its discretion, to take the
following actions under the Plan:
(a) to determine the individuals to whom, and the time or
times at which, Options to purchase the Company's shares of common
stock, par value $.01 per share ("Common Shares"), shall be granted,
the number of Common Shares to be subject to each Option and whether
such Options shall be ISOs or Non-Qualified Options;
(b) to interpret the Plan;
(c) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(d) to determine the terms and provisions of the respective
stock option agreements granting Options, including the date or dates
upon which Options shall become exercisable, which terms need not be
identical;
<PAGE> 2
(e) to accelerate the vesting of any outstanding Options;
(f) to delegate to the Company's Chief Executive Officer
authority to take all action described under Sections 2(a), (d) and
(e) of the Plan subject to limitations to be approved in writing, in
advance, by the Committee; and
(g) to make all other determinations and take all other
actions necessary or advisable for the administration of the Plan. In
making such determinations, the Committee may take into account the
nature of the services rendered by such individuals, their present and
potential contributions to the Company's success, and such other
factors as the Committee, in its discretion, shall deem relevant. An
individual to whom an option has been granted under the Plan is
referred to herein as an "Optionee." The Committee's determinations on
the matters referred to in this Section 2 shall be conclusive.
3. SHARES SUBJECT TO THE PLAN.
The total number of Common Shares which shall be subject to Options
granted under the Plan shall not exceed 3,000,000 subject to adjustment as
provided in Section 7 hereof. The Company shall at all times, while the Plan
is in force, reserve such number of Common Shares as will be sufficient to
satisfy the requirements of outstanding Options. The Common Shares to be
issued upon exercise of Options shall be authorized and unissued or reacquired
Common Shares held in treasury. The unexercised portion of any expired,
terminated or canceled Option shall again be available for the grant of Options
under the Plan. In addition, in no event shall any one person be granted
options for more than 500,000 Common Shares during any calendar year for which
the Plan is in effect, subject to adjustment as provided in Section 7 hereof.
4. ELIGIBILITY.
(a) Options may be granted under the Plan only to employees of the
Company, LCI or to employees of any other "subsidiary corporation" (a
"Subsidiary") of the Company within the meaning of Section 424(f) of the Code.
The term "Company," when used in context of an Optionee's employment, shall be
deemed to include Subsidiaries of the Company.
(b) Nothing contained in the Plan shall be construed to limit the
right of the Company to grant stock options otherwise than under the Plan for
proper corporate purposes.
5. TERMS OF OPTIONS.
<PAGE> 3
The terms of each Option granted under the Plan shall be determined by
the Committee consistent with the provisions of the Plan, including the
following:
(a) The purchase price of the Common Shares subject to each Option
shall be fixed by the Committee, in its discretion, at the time such Option is
granted; provided that such purchase price may not be less than the Fair Market
Value (as determined in accordance with Section 5(h) hereof) of the Common
Shares as of the date of grant.
(b) The dates on which each Option (or portion thereof) shall be
exercisable shall be fixed by the Committee, in its discretion, at the time
such Option is granted.
(c) The expiration of each Option shall be fixed by the Committee, in
its discretion, at the time such Option is granted. No Option shall be
exercisable after the expiration of ten (10) years from the date of its grant
and each Option shall be subject to earlier termination as determined by the
Committee, in its discretion, at the time such Option is granted.
(d) The exercise period following death, disability and termination
of employment shall be determined by the Committee, in its discretion, at the
time the option is granted.
(e) Options shall be exercised by the delivery to the Company at its
principal office or at such other address as may be established by the
Committee (Attention: Corporate Treasurer) of written notice of the number of
Common Shares with respect to which the Option is being exercised accompanied
by payment in full of the purchase price of such shares. Unless otherwise
determined by the Committee at the time of grant, payment for such shares may
be made (i) in cash, (ii) by certified check or bank cashier's check payable to
the order of the Company in the amount of such purchase price, (iii) by
delivery to the Company of Common Shares held by the Optionee for at least six
months having a Fair Market Value equal to such purchase price, (iv) by
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay such purchase price and to
sell the Common Shares to be issued upon exercise of the Option and deliver the
cash proceeds less commissions and brokerage fees to the Optionee or to deliver
the remaining Common Shares to the Optionee, or (v) by any combination of the
methods or payment described in (i) through (iv) above.
(f) An Optionee shall not have any of the rights of a shareholder
with respect to the Common Shares subject to his or her Option until such
shares are issued to him or her upon the exercise of his or her Option.
(g) Options shall not be transferable, except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code, and may be exercised during the lifetime of the Optionee
only by him or her. No Option granted under the Plan shall be subject to
execution, attachment or other process.
<PAGE> 4
(h) For purposes of the Plan, the Fair Market Value of Common Shares
as of any date shall be deemed to be the mean between the highest and lowest
sale prices reported on the New York Stock Exchange ("NYSE"), or the principal
national securities exchange on which such Common Shares are listed and traded
on the immediately preceding date, or, if there is no such sale on that date,
then on the last preceding date on which such a sale was reported. If the
Common Shares are not quoted on the NYSE, or listed on an exchange, or
representative quotes are not otherwise available, the Fair Market Value of the
Common Shares shall mean the amount determined by the Committee to be the Fair
Market Value based upon a good faith attempt to value the Common Shares
accurately.
<PAGE> 5
6. SPECIAL PROVISIONS APPLICABLE TO ISOS.
The following special provisions shall be applicable to ISOs granted
under the Plan.
(a) No ISOs shall be granted under the Plan after ten (10) years from
the earlier of (i) the date the Plan is adopted, or (ii) the date the Plan is
approved by the shareholders of the Company.
(b) ISOs may not be granted to a person who owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, any of its Subsidiaries, or any "parent corporation" (a "Parent") of
the Company within the meaning of Section 424(e) of the Code.
(c) If the aggregate Fair Market Value of the Common Shares with
respect to which ISOs are exercisable for the first time by any Optionee during
a calendar year (under all plans of the Company and its Parents and
Subsidiaries) exceeds $100,000, such ISOs shall be treated, to the extent of
such excess, as Non-Qualified Options. For purposes of the preceding sentence,
the Fair Market Value of the Common Shares shall be determined at the time the
ISOs covering such shares were granted.
(d) Without prior written notice to the Company, no Common Shares
acquired by an Optionee upon exercise of an ISO granted hereunder may be
disposed of by the Optionee within two (2) years from the date such ISO was
granted, nor within one (1) year after the transfer of such Common Shares to
the Optionee; provided, however, that a transfer to a trustee, receiver, or
other fiduciary in any insolvent proceeding, as described in Section 422(c)(3)
of the Code shall not be deemed to be such a disposition. If Section 422 of
the Code is amended during the term of this Plan, the Committee may modify this
Plan consistently with such amendment.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event that the outstanding Common Shares are changed by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of shares and the
like, or dividends payable in Common Shares, an appropriate adjustment shall be
made by the Committee in the aggregate number of shares available under the
Plan, the maximum number of shares which may be granted to any one person
during any calendar year, and in the number of shares and price per share
subject to outstanding Options. If the Company shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially
all of the assets of the Company shall be sold or exchanged, an Optionee shall
at the time of issuance of the stock under such corporate event be entitled to
receive upon the exercise of his Option the same number and kind of shares of
stock or the same amount of property, cash or securities as he would have been
entitled to receive upon the occurrence or any such corporate event as if he
had been,
<PAGE> 6
immediately prior to such event, the holder of the number of Common Shares
covered by his Option.
(b) Any adjustment under this Section 7 in the number of Common
Shares subject to Options shall apply proportionately to only the unexercised
portion of any Option granted hereunder. If fractions of a share would result
from any such adjustment, the adjustment shall be revised to the next lower
whole number of shares.
8. FURTHER CONDITIONS OF EXERCISE.
(a) Unless prior to the exercise of an Option, the Common Shares
issuable upon such exercise are the subject of a registration statement filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Securities Act"), and there is then in effect a
prospectus meeting the requirements of Section 10(a)(3) of the Securities Act,
the notice of exercise with respect to such Option shall be accompanied by a
representation or agreement of the Optionee to the Company to the effect that
such shares are being acquired for investment only and not with a view to the
resale or distribution thereof, or such other documentation as may be required
by the Company, unless, in the opinion of counsel to the Company, such
representation, agreement or documentation is not necessary to comply with the
Securities Act.
(b) Anything in subparagraph (a) of this Section 8 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell any Common
Shares until they have been listed on each securities exchange on which the
Common Shares may then be listed and until and unless, in the opinion of
counsel to the Company, the Company may issue such shares pursuant to the
qualification of an effective registration statement, or an exemption from
registration, under such state and federal laws, rules or regulations as such
counsel may deem applicable. The Company shall use reasonable efforts to
effect such listing, qualification and registration, as the case may be.
9. TERMINATION, MODIFICATION AND AMENDMENT.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate ten (10) years from the date of its adoption by the Board of
Directors, and no Option shall be granted after termination of the Plan. Any
Option outstanding at the termination date shall remain outstanding until it
either has expired or been exercised.
(b) The Plan may from time to time be terminated, modified or amended
by the affirmative vote of the holders of a majority of the outstanding shares
of the capital stock of the Company entitled to vote thereon.
(c) The Board of Directors of the Company may at any time terminate
the Plan or from time to time make such modifications or amendments of the Plan
as it may deem advisable; provided, however, that the Board of Directors shall
not, without approval by the
<PAGE> 7
affirmative vote of the holders of a majority of the outstanding shares of the
capital stock of the Company entitled to vote thereon, increase (except as
provided in Section 7) the maximum number of Common Shares as to which Options
may be granted under the Plan or change the class of persons eligible to
receive ISOs under the Plan.
(d) No termination, modification or amendment of the Plan may
adversely affect the rights conferred by any Options without consent of the
affected Optionee.
10. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective upon adoption by the Board of
Directors of the Company, subject to the approval by the shareholders of the
Company. Options may be granted under the Plan prior to receipt of such
approval, provided that, in the event such approval is not obtained, the Plan
and all Options granted under the Plan shall be null and void and of no force
and effect.
11. NOT A CONTRACT OF EMPLOYMENT.
Nothing contained in the Plan or in any stock option agreement
executed pursuant hereto shall be deemed to confer upon any Optionee any right
to remain in the employ of the Company or subsidiary corporation.
12. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware
without reference to principles of conflict of law.
13. WITHHOLDING.
As a condition to the exercise of any Option, the Committee may
require that an Optionee satisfy, through withholding from other compensation
or otherwise, the full amount of all federal, state and local income and other
taxes required to be withheld in connection with such exercise.
14. APPROVED LEAVES OF ABSENCE.
In the case of an Optionee on an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests of
the Company, provide in a specific case for continuation of the Options held by
such Optionee during such leave of absence; such continuation to be in such
terms and conditions as the Committee determines to be appropriate, except that
in no event shall an option be exercisable after ten (10) years from the date
it is granted.
