As filed with the Securities and Exchange Commission on June 30, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VARI-L COMPANY, INC.
--------------------
(Exact name of registrant as specified in its charter)
Colorado 06-0678347
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(State of incorporation) (I.R.S. Employer ID No.)
4895 Peoria St., Denver, Colorado 80239
- --------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
VARI-L COMPANY, INC.
TANDEM STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
-----------------------------------------------------------------
(Full Title of the Plan)
Joseph H. Kiser
Vari-L Company, Inc.
4895 Peoria St.
Denver, CO 80239
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(Name and address of agent for service)
(303) 371-1560
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(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed maximum Proposed maximumAmount of
securities to to be offering aggregate registration
be registered registered price per share offering price fee
Common Stock
$0.01 Par Value(1) 270,000 $8.50 $2,295,000 $638.01
(1) The price is set forth solely for the purposes of calculating the fee
and is based on the last price reported to the National Association of
Securities Dealers Automated Quotation System on June 25, 1999.
THE CONTENTS OF THE FORM S-8 REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BY VARI-L COMPANY, INC. ON JANUARY 19,
1995, FILE NUMBER 33-88666, ARE INCORPORATED HEREIN BY REFERENCE.
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 Denver, State of Colorado, on
this 29th day of June, 1999.
VARI-L COMPANY, INC.
By:/s/David G. Sherman
David G. Sherman, President
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.
SIGNATURE TITLE DATE
--------- ----- ----
President,
/s/David G. Sherman Chief Executive Officer June 29, 1999
David G. Sherman (Principal Executive Officer)
and Director
Chairman of the Board,
/s/Joseph H. Kiser Chief Scientific Officer June 29, 1999
Joseph H. Kiser and Director
Vice President of
/s/Jon L. Clark Finance and Chief June 29, 1999
Jon L. Clark Financial Officer
(Principal Accounting and
Financial Officer)
/s/Sarah L. Booher Director June 29, 1999
Sarah L. Booher
/s/David A. Lisowski Director June 29, 1999
David A. Lisowski
/s/Anthony B. Petrelli Director June 29, 1999
Anthony B. Petrelli
/s/Jae Shim Director June 29, 1999
Jae Shim
/s/Derek L. Bailey Director June 29, 1999
Derek L. Bailey
EXHIBIT INDEX
No. Exhibit Method of Filing
- --- ------- ----------------
4 Amended and Restated Tandem Stock
Option and Appreciation Rights Plan
effective as of June 18, 1999 Filed herewith electronically
5 Opinion of Gorsuch Kirgis LLP
regarding legality of shares
being issued. Filed herewith electronically
23 Consent of Haugen, Springer & Co. Filed herewith electronically
GORSUCH KIRGIS LLP
Attorneys at Law
Tower I, Suite 1000 1515 Arapahoe Street Denver, Colorado 80202
Telephone (303) 376-5000 Facsimile (303) 376-5001
June 29, 1999
Vari-L Company, Inc.
4895 Peoria Street
Denver, Colorado 80239
Re: Vari-L Company, Inc.
Registration Statement on Form S-8
Gentlemen:
We are counsel to Vari-L Company, Inc., a Colorado corporation (the
"Company"), in connection with the preparation of a registration statement
on Form S-8 to be filed with the Securities and Exchange Commission (the
"Registration Statement"), relating to the proposed offering by the
Company of up to 270,000 additional shares of Common Stock pursuant to the
Company's Tandem Stock Option and Stock Appreciation Rights Plan (the
"Plan").
In this connection, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
certificates and written or oral statements of officers, legal counsel and
accountants of the Company and of public officials, and other documents
that we have considered necessary and appropriate, and, based thereon, we
advise you that in our opinion:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Colorado.
2. The shares offered by the Company, when issued pursuant to and
in accordance with the Plan will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
GORSUCH KIRGIS LLP
/s/Gorsuch Kirgis LLP
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
The Board of Directors and Stockholders
Vari-L Company, Inc.
We consent to the incorporation by reference of our report on the
financial statements of Vari-L Company, Inc. as of December 31, 1998 and
1997 and for the years then ended in the Company's Registration Statement
on Form S-8.
/s/Haugen, Springer & Co., P.C.
HAUGEN, SPRINGER & CO., P.C.
June 29, 1999
VARI-L COMPANY, INC.
TANDEM STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
TABLE OF CONTENTS
1. Purpose 1
2. General Provisions. 1
3. Eligibility 2
4. Number of Shares Subject to Plan 2
5. Stock Option. 3
6. Stock Appreciation Rights. 6
7. Capital Adjustments 7
8. Nontransferability 8
9. Amendment, Suspension, or Termination of Plan 8
10. Effective Date 8
11. Termination Date 9
12. Resale of Shares Purchased 9
13. Acceleration of Options 9
14. Written Notice Required; Tax Withholding 10
15. Compliance with Securities Laws 10
16. Waiver of Vesting Restrictions by Committee 10
17. Reports to Participants 10
18. No Employee Contract 11
TANDEM STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
AS OF JUNE 18, 1999
1. PURPOSE. Vari-L Company, Inc. (the "Company") hereby
establishes the Tandem Stock Option and Stock Appreciation Rights Plan
(the "Plan"). The purpose of the Plan is to advance the interests of the
Company and its stockholders by providing a means by which the Company
shall be able to attract and retain competent officers, directors, key
employees, advisors and consultants by providing them with an opportunity
to participate in the increased value of the Company which their effort,
initiative, and skill have helped produce.
2. GENERAL PROVISIONS.
(a) The Plan will be administered by the Compensation Committee
of the Board of Directors of the Company (the "Committee"). The Committee
shall be comprised of two or more directors designated by the Board of
Directors. If and to the extent that Securities Exchange Act Rule 16b-3 or
Internal Revenue Code Section 162 are applicable to the Plan, Committee
members shall qualify as "Non-Employee Directors" within the meaning of
Securities Exchange Act Rule 16b-3 and as "outside directors" within the
meaning of Treasury Regulation Section 1.162-27(e)(3). (In the event Rule
16b-3 or Treasury Regulation 1.162.27(3)(3) is amended, modified or
repealed, the requirements for being a member of the Committee shall
reflect the then current requirements of the successor rule or regulation,
if any.) Options granted under the Plan are intended to qualify for the
"qualified performance based compensation" exception to Internal Revenue
Code Section 162(m). The Committee shall have full power to construe and
interpret the Plan and to establish and amend rules and regulations for
its administration. Notwithstanding the foregoing, if it would be
consistent with all applicable law including without limitation Rule 16b-3
and Treasury Regulation 1.162-27(e)(3), then the Plan may be administered
by the Board of Directors, and if so administered all subsequent
references to the Committee shall be read as referring to the Board of
Directors. Any action of the Committee with respect to the Plan shall be
taken by majority vote or by the unanimous written consent of the
Committee members.
(b) The Committee shall determine, in its sole discretion,
which participants under the Plan shall be granted stock options or stock
appreciation rights, the time or times at which options and rights are
granted, as well as the number of shares and the duration of the options
or rights which are granted to participants, provided, however, that no
participant may be granted more than 300,000 options during any three year
period under the Plan.
(c) The Committee shall also determine any other terms and
conditions relating to options and rights granted under the Plan as the
Committee may prescribe, in its sole discretion.
(d) The Committee may, in its discretion, delegate its
administrative duties with respect to the Plan to an officer or employees,
or to a committee composed of officers or employees, of the Company.
(e) The Committee shall make all other determinations and take
all other actions which it deems necessary or advisable for the
administration of the Plan.
(f) All decisions, determinations and interpretations made by
the Committee shall be binding and conclusive on all participants in the
Plan and on their legal representatives, heirs and beneficiaries.
(g) Notwithstanding anything to the contrary herein, the
Committee shall have no authority to determine the amount, price or timing
of grants hereunder to members of the Committee, unless, and only to the
extent that, its exercise of such authority is consistent with all
applicable laws, including, without limitation, Rule 16b-3.
3. ELIGIBILITY. Officers, directors and employees of the Company
and advisors and consultants to the Company shall be eligible to
participate in the Plan and to receive options and rights hereunder,
provided, however, that: (i) Incentive Stock Options may only be granted
to employees (including officers and directors who are employees) of the
Company or its subsidiaries; and (ii) advisors and consultants shall be
eligible for grants only if they provide bona fide services that are not
rendered in connection with the offer or sale of securities or in a
capital- raising transaction.
4. NUMBER OF SHARES SUBJECT TO PLAN. The aggregate number of
shares of the Company's $.01 par value Common Stock which may be granted
to participants shall be 3,270,000 shares, subject to adjustment only as
provided in Sections 5(h) and 7 hereof. These shares may consist of
shares of the Company's authorized but unissued Common Stock or shares of
the Company's authorized and issued Common Stock reacquired by the Company
and held in its treasury or any combination thereof. If an option or
right granted under this Plan is surrendered, or for any other reason
ceases to be exercisable in whole or in part, the shares as to which the
option or right ceases to be exercisable shall be available for options or
rights to be granted to the same or other participants under the Plan,
except to the extent that an option or right is deemed surrendered by the
exercise of a tandem stock appreciation right and that right is paid by
the Company in stock, in which event the shares issued in satisfaction of
the right shall not be available for new options or rights under the Plan.
5. STOCK OPTION.
(a) TYPE OF OPTIONS. Options granted on or after January 28,
1994 may be either Nonqualified Stock Options or Incentive Stock Options
as determined by the Committee in its sole discretion and as reflected in
the Notice of Grant issued by the Committee. All Options granted under
the Plan prior to January 28, 1994 were nonqualified stock options.
"Incentive Stock Option" means an option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). "Nonqualified Stock
Option" means an option not intended to qualify as an Incentive Stock
Option or an Incentive Stock Option which is converted to a Nonqualified
Stock Option under Section 5(f) hereof.
(b) OPTION PRICE. The price at which options may be granted
under the Plan shall be determined as follows:
(i) For Incentive Stock Options the option price shall be
equal to 100% of the Fair Market Value of the stock on the date the option
is granted provided, however, that Incentive Stock Options granted to any
person who, at the time such option is granted owns (as defined in Section
422 of the Code) shares possessing more than 10% of the total combined
voting power of all classes of shares of the Company or its parent or
subsidiary corporation, the Option Price shall be 110% of the Fair Market
Value.
(ii) For Nonqualified Stock Options the option price may be
less than the Fair Market Value of the stock on the date of grant, but in
no event shall the option price be less than fifty percent 50% of the Fair
Market Value of the stock on the date the option is granted, provided,
however that any grant of a Nonqualified Stock Option at a price less than
Fair Market Value shall not qualify for the "qualified performance based
compensation" exception to Internal Revenue Code Section 162(m).
(iii) For purposes of this Plan, and except as otherwise
set forth herein, "Fair Market Value" shall mean (a) if there is an
established market for the Company's Common Stock on a stock exchange, in
an over-the-counter market or otherwise, the mean of the highest and
lowest quoted selling prices on the valuation date, or (b) if there were
no such sales on the valuation date, then in accordance with Treas. Reg.
Section 20.2031-2 or successor regulations. Unless otherwise specified by
the Committee at the time of grant, or in the Plan (as in the case of
automatic grants to Committee members), the valuation date for purposes of
determining Fair Market Value shall be the date of grant. The Committee
may, however, specify in any grant of an Option or Stock Appreciation
Right that, instead of the date of the grant, the valuation date shall be
a valuation period of up to ninety (90) days preceding the date of grant,
and Fair Market Value for purposes of such grant shall be the average over
the valuation period of the mean on the highest and lowest quoted selling
prices on each date on which sales were made in the valuation period,
provided, however, that if the Committee fails to specify a valuation
period and there were no sales on the date of grant then Fair Market Value
shall be determined as if the Committee had specified a thirty (30) day
valuation period. If there is no established market for the Company's
Common Stock, of if there were no sales during the applicable valuation
period, the determination of Fair Market Value shall be established by the
Committee in its sole discretion considering the criteria set forth in
Treasury Regulation Section 20.2031-2 or successor regulations.
(c) EXERCISE OF OPTION. The right to purchase shares covered
by any option or options under this Plan shall be exercisable only in
accordance with the terms and conditions of the grant to the participant.
Such terms and conditions may include a time period or schedule whereby
some of the options granted may become exercisable, or "vested", over time
and certain conditions, such as continuous service or specified
performance criteria or goals, must be satisfied for such vesting. The
determination as to whether to impose any such vesting schedule or
requirements, and the terms of such schedule or requirements, shall be
within the sole discretion of the Committee. These terms and conditions
may be different for different participants so long as all options satisfy
the requirements of the Plan.
Options shall be paid for in cash or in shares of the Company's
Common Stock, which shares shall be valued at the Fair Market Value of the
shares on the date of exercise, or any combination thereof. The Committee
may, in its discretion and subject to ratification by the entire Board of
Directors, loan one or more participants all or a portion of the exercise
price, together with the amount of any tax liability incurred by the
participant as a result of the exercise of the option, for up to three (3)
years with interest payable at the prime rate quoted in the Wall Street
Journal on the date of exercise. Members of the Committee may receive
such loans for the exercise of their options without Committee approval or
Board ratification.
The Committee may also permit a participant to effect a net exercise
of an option without tendering any shares of the Company's stock as
payment for the option. In such an event, the participant will be deemed
to have paid for the exercise of the option with shares of the Company's
stock and shall receive from the Company a number of shares equal to the
difference between the shares that would have been tendered and the number
of options exercised.
The Committee may also cause the Company to enter into arrangements
with one or more licensed stock brokerage firms whereby participants may
exercise options without payment therefor but with irrevocable orders to
such brokerage firm to immediately sell the number of shares necessary to
pay the exercise price for the option and the withholding taxes, if any,
and then to transmit the proceeds from such sales directly to the Company
in satisfaction of such obligations.
(d) DURATION OF OPTIONS. Unless otherwise prescribed by the
Committee or this Plan, options granted hereunder shall expire ten (10)
years from the date of grant, subject to early termination as provided in
Section 5(f) hereof.
(e) INCENTIVE STOCK OPTIONS LIMITATIONS. In no event shall an
Incentive Stock Option be granted to any person who, at the time such
option is granted, owns (as defined in Section 422 of the Code) shares
possessing more than 10% of the total combined voting power of all classes
of shares of the Company or of its parent or subsidiary corporation,
unless the option price is at least 110% of the Fair Market Value of the
stock subject to the Option, and such Option is by its terms not
exercisable after the expiration of five (5) years from the date such
Option is granted. Moreover, the aggregate Fair Market Value (determined
as of the time that option is granted) of the shares with respect to which
Incentive Stock Options are exercisable for the first time by any
individual employee during any single calendar year under the Plan shall
not exceed $100,000. In addition, in order to receive the full tax
benefits of an Incentive Stock Option, the employee must not resell or
otherwise dispose of the stock acquired upon exercise of the Incentive
Stock Option until two (2) years after the date the option was granted and
one (1) year after it was exercised.
(f) EARLY TERMINATION OF OPTIONS. In the event a participant's
employment with or service to the Company shall terminate as the result of
total disability or the result of retirement at 65 years of age or later,
then any options granted to such participant shall terminate and may no
longer be exercised three (3) months after the time such participant is no
longer an employee, officer or director of, or advisor or consultant to,
the Company. If the participant dies while employed or engaged by the
Company, to the extent that the option was exercisable at the time of the
participant's death, such option may, within one year after the
participant's death, be exercised by the person or persons to whom the
participant's rights under the option shall pass by will or by the
applicable laws of descent and distribution; provided, however, that an
option may not be exercised to any extent after the expiration of the
option as originally granted. In the event a participant's employment or
engagement by the Company shall terminate as the result of any
circumstances other than those referred to above, whether terminated by
the participant or the Company, with or without cause, then all options
granted to such participant under this Plan shall terminate and no longer
be exercisable as of the date of such termination, provided, however, that
if an employee with an Incentive Stock Option terminates employment prior
to its exercise, but after such termination becomes or remains a non-
employee officer, director, advisor or consultant eligible for
Nonqualified Stock Options hereunder, then the Incentive Stock Option
shall be converted to a Nonqualified Stock Option on the date the
Incentive Stock Option would otherwise have terminated.
An employee who is absent from work with the Company because of total
disability, as defined below, shall not by virtue of such absence alone be
deemed to have terminated such participant's employment with the Company.
All rights which such participant would have had to exercise options
granted hereunder will be suspended during the period of such absence and
may be exercised cumulatively by such participant upon his return to the
Company so long as such rights are exercised prior to the expiration of
the option as originally granted. For purposes of this Plan, "total
disability" shall mean disability, as a result of sickness or injury, to
the extent that the participant is prevented from engaging in any
substantial gainful activity and is eligible for and receives a disability
benefit under Title II of the Federal Social Security Act.
(g) AUTOMATIC GRANTS TO COMMITTEE MEMBERS. Except as provided
in Section 2(g) hereof, no action may be taken by the Committee to grant
any options to members of the Committee. Notwithstanding the foregoing
and irrespective of any action by the Committee, on the date of each
meeting of the Board of Directors or a committee thereof, each member of
the Committee and of the Audit Committee (other than members who are
officers or employees of the Company) that attends such meeting in person
shall receive a grant of a ten year, fully vested, Nonqualified Stock
Option to purchase 500 shares of the Company's Common Stock at an exercise
price equal to the Fair Market Value calculated in accordance with Section
5(b) with a valuation period of thirty (30) days.
(h) RELOAD BY PAYMENT IN SHARES. To the extent that a
participant pays for the exercise of an option with shares of the
Company's stock rather than cash, the tendered shares shall be deemed to
be added back to the Plan, increasing the total number of shares subject
to and reserved for the Plan by that amount.
6. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted by the
Committee under this Plan upon such terms and conditions as it may
prescribe. A stock appreciation right may be granted only in connection
with an option previously granted to or to be granted under this Plan.
Each stock appreciation right shall become nonexercisable and be forfeited
if the related option is exercised. "Stock appreciation right" as used in
this Plan means a right to receive the excess of Fair Market Value, on the
date of exercise, of a share of the Company's Common Stock on which an
appreciation right is exercised over the option price provided for in the
related option and is issued in consideration of services performed for
the Company or for its benefit by the participant. Such excess is
hereafter called "the differential."
(b) EXERCISE OF STOCK APPRECIATION RIGHTS. Stock appreciation
rights shall be exercisable and be payable in the following manner:
(i) A stock appreciation right shall be exercisable by the
participant at the same time or times that the option to which it relates
could be exercised. A participant wishing to exercise a stock
appreciation right shall give written notice of such exercise to the
Company. Upon receipt of such notice, the Company shall determine, in its
sole discretion, whether the participant's stock appreciation rights shall
be paid in cash or in shares of the Company's Common Stock or any
combination of cash and shares and thereupon shall, without deducting any
transfer or issue tax, deliver to the person exercising such right an
amount of cash or shares of the Company's Common Stock or a combination
thereof with a value equal to the differential minus withholding taxes, if
any. The date the Company receives the written notice of exercise
hereunder is the exercise date. The shares issued upon the exercise of a
stock appreciation right may consist of shares of the Company's authorized
but unissued Common Stock or of its authorized and issued Common Stock
reacquired by the Company and held in its treasury or any combination
thereof. No fractional share of Common Stock shall be issued; rather, the
Committee shall determine whether cash shall be given in lieu of such
fractional share or whether such fractional share shall be eliminated.
(ii) The exercise of a stock appreciation right shall
automatically result in the surrender of the related stock option by the
participant on a share for share basis. Likewise, the exercise of a stock
option shall automatically result in the surrender of the related stock
appreciation right. Shares covered by surrendered options shall be
available for granting further options under this Plan except to the
extent and in the amount that such rights are paid by the Company with
shares of stock, as more fully discussed in Section 4 hereof.
(iii) The Committee may impose any other terms and
conditions it prescribes upon the exercise of a stock appreciation right,
which conditions may include a condition that the stock appreciation right
may only be exercised in accordance with rules and regulations adopted by
the Committee from time to time.
(c) LIMITATION ON PAYMENTS. Notwithstanding any other
provision of this Plan, the Committee may from time to time determine,
including at the time of exercise, the maximum amount of cash or stock
which may be given upon exercise of any stock appreciation right in any
year, provided, however, that all such amounts shall be paid in full no
later than the end of the year immediately following the year in which the
participant exercised such stock appreciation rights. Any determination
under this paragraph may be changed by the Committee from time to time
provided that no such change shall require the participant to return to
the Company any amount theretofore received or to extend the period within
which the Company is required to make full payment of the amount due as
the result of the exercise of the participant's stock appreciation rights.
(d) EXPIRATION OR TERMINATION OF STOCK APPRECIATION RIGHTS.
(i) Each stock appreciation right and all rights and
obligations thereunder shall expire on the date on which the related
option expires or terminates.
(ii) A stock appreciation right shall terminate and may no
longer be exercised upon the expiration or termination of the related
option.
7. CAPITAL ADJUSTMENTS. The aggregate number of shares of the
Company's Common Stock subject to this Plan, the maximum number of shares
as to which options may be granted to any one participant hereunder, and
the number of shares and the price per share subject to outstanding
options, shall be appropriately adjusted by the Committee for any increase
or decrease in the number of shares of Common Stock which the Company has
issued resulting from any stock split, reverse stock split, stock
dividend, combination of shares or any other change, or any exchange for
other securities or any reclassification, merger, reorganization,
consolidation, redesignation, recapitalization, or otherwise. Similar
adjustments shall be made to the terms of stock appreciation rights.
8. NONTRANSFERABILITY. During a participant's lifetime, an option
may be exercisable only by the participant and options granted under the
Plan and the rights and privileges conferred thereby shall not be subject
to execution, attachment or similar process and may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of
law or otherwise) other than by will or by the applicable laws of descent
and distribution. Notwithstanding the foregoing, to the extent permitted
by applicable law and Rule 16b-3, the Committee may (i) permit a recipient
of a Nonqualified Stock Option to designate in writing during the
participant's lifetime a beneficiary to receive and exercise the
participant's Nonqualified Stock Options in the event of such
participant's death (as provided in Section 5(f)), (ii) grant Nonqualified
Stock Options that are transferable to the immediate family or a family
trust of the recipient, and (iii) modify existing Nonqualified Stock
Options to be transferable to the immediate family or a family trust of
the recipient. Any other attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of any option under the Plan or of any right or
privilege conferred thereby, contrary to the provisions of the Plan shall
be null and void.
9. AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN. The Board of
Directors or the Committee may at any time suspend or terminate the Plan
and may amend it from time to time in such respects as the Board of
Directors or the Committee may deem advisable in order that options and
rights granted hereunder shall conform to any change in the law, or in any
other respect which the Board of Directors or the Committee may deem to be
in the best interests of the Company; provided, however, that no such
amendment shall, without the participant's consent, alter or impair any of
the rights or obligations under any option or stock appreciation rights
theretofore granted to him under the plan; and provided further that no
such amendment shall, without shareholder approval: increase the total
number of shares available for grants of options or rights under the Plan
(except as provided by Section 7 hereof); or effect any change to the
Plan which is required to be approved by shareholder by law, including,
without limitation, the regulations promulgated under Section 422 and
Section 162(m) of the Code. In addition, the provisions of Section 5(g)
relating to the amount, price and timing of grants to members of the
Committee shall not be amended more than once every six (6) months other
than to comport with applicable changes to the Code, the Employee
Retirement Income Security Act or rules thereunder.
10. EFFECTIVE DATE. The effective date of the Plan shall be
December 31, 1987, provided, however, that the effective date of the Plan
as it relates to Incentive Stock Options shall be January 28, 1994 and no
Incentive Stock Option may be granted hereunder before January 28, 1994.
If the January 28, 1994 amendment to and restatement of the Plan is not
approved by the affirmative vote of a majority of the Company's
shareholders on or before January 28, 1995, then the Plan shall remain in
effect as it was last amended on June 14, 1990. The failure of the
shareholders to approve such amendment and restatement of the Plan shall
not, however, affect the validity, duration or any other terms and
conditions of options or rights granted prior to January 28, 1994, and
shall affect the terms and conditions of options or rights granted after
that date only to the extent required by law.
11. TERMINATION DATE. Unless this Plan shall have been previously
terminated by the Committee, this Plan shall terminate on January 28,
2004, except as to options and rights theretofore granted and outstanding
under the Plan at that date, and no stock option or stock appreciation
rights shall be granted after that date.
12. RESALE OF SHARES PURCHASED. All shares of stock purchased under
this Plan may be freely resold, subject to applicable state and federal
securities laws restricting their transfer. As a condition to exercise of
an option, the Company may impose various conditions, including a
requirement that the person exercising such option represent and warrant
that, at the time of such exercise, the shares of Common Stock being
purchased are being purchased for investment and not with a view to resale
or distribution thereof. The resale of shares purchased upon the exercise
of Incentive Stock Options may, however, cause the employee to lose
certain tax benefits if the employee fails to comply with the holding
period requirements described in Section 5(e) hereof.
13. ACCELERATION OF OPTIONS. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the
assets or stock of the Company by means of a sale, merger or other
reorganization, liquidation, or otherwise, any option granted pursuant to
the Plan shall become immediately exercisable with respect to the full
number of shares subject to that option during the period commencing as of
the date of the agreement to dispose of all or substantially all of the
assets or stock of the Company and ending when the disposition of assets
or stock contemplated by that agreement is consummated or the option is
otherwise terminated in accordance with its provisions or the provisions
of the Plan, whichever occurs first; provided that no option shall be
immediately exercisable under this Section on account of any agreement of
merger or other reorganization where the shareholders of the Company
immediately before the consummation of the transaction will own 50% or
more of the total combined voting power of all classes of stock entitled
to vote of the surviving entity (whether the Company or some other entity)
immediately after the consummation of the transaction. In the event the
transaction contemplated by the agreement referred to in this section is
not consummated, but rather is terminated, canceled or expires, the
options granted pursuant to the Plan shall thereafter be treated as if
that agreement had never been entered into.
14. WRITTEN NOTICE REQUIRED; TAX WITHHOLDING. Any option or right
granted pursuant to the Plan shall be exercised when written notice of
that exercise by the participant has been received by the Company at its
principal office and, with respect to options, when such notice is
received and full payment for the shares with respect to which the option
is exercised has been received by the Company. Participant agrees that,
to the extent required by law, the Company shall withhold or require the
payment by participant of any state, federal or local taxes resulting from
the exercise of an option or right, provided however that to the extent
permitted by law, the Committee may in its discretion, permit some or all
of such withholding obligation to be satisfied by the delivery by the
participant of, or the retention by the Company of, shares of its Common
Stock.
15. COMPLIANCE WITH SECURITIES LAWS. Shares shall not be issued
with respect to any option or right granted under the Plan unless the
exercise of that option and the issuance and delivery of the shares
pursuant thereto shall comply with all relevant provisions of state and
federal law, including without limitation the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder and the
requirements of any stock exchange or automated quotation system upon
which the shares may then be listed or traded, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. Further, each participant must consent to the imposition of a
legend on the certificate representing the shares of Common Stock issued
upon the exercise of the option or right restricting their transferability
as may be required by law, the option, or the Plan.
16. WAIVER OF VESTING RESTRICTIONS BY COMMITTEE. Notwithstanding
any provision of the Plan, in the event a participant dies, becomes
disabled, retires as an employee, officer or director of, or as an advisor
or consultant to, the Company, the Committee shall have the discretion to
waive any vesting restrictions on the retiree's options, or the early
termination of any Nonqualified Stock Options held by the retiree.
17. REPORTS TO PARTICIPANTS. The Company shall furnish to each
participant a copy of the annual report sent to the Company's
shareholders. Upon written request, the Company shall furnish to each
participant a copy of its most recent annual report and each quarterly
report to shareholders issued since the end of the Company's most recent
fiscal year.
18. NO EMPLOYEE CONTRACT. The grant of an option or right under the
Plan shall not confer upon any participant any right with respect to
continuation of employment by, or the rendition of advisory or consulting
services to, the Company, nor shall it interfere in any way with the
Company's right to terminate the participant's employment or services at
any time.
DAVID G. SHERMAN, JOSEPH H. KISER,
President Chairman of the Board
and Secretary
