<PAGE> 1
As filed with the Securities and Exchange Commission on August 20, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Form S-8
Registration Statement
Under
The Securities Act of 1933
----------
CITADEL COMMUNICATIONS CORPORATION
(Exact name of issuer as specified in its charter)
Nevada 86-0748219
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
City Center West
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, Nevada 89128
(Address of principal executive offices) (Zip Code)
Citadel Communications Corporation 1999 Long-Term Incentive Plan
(full title of plan)
Lawrence R. Wilson
President and Chief Executive Officer
City Center West
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, NV 89128
(Name and address of agent for service)
(702) 804-5200
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Title of Proposed maximum Proposed maximum
Securities to Amount to be offering price aggregate Amount of
be registered registered (1) per share (2) offering price (2) registration fee (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,750,000
$.001 par value Shares $29.25 $51,187,500 $14,230.13
==================================================================================================================
</TABLE>
(1) If, as a result of stock splits, stock dividends or similar transactions,
the number of securities purported to be registered on this registration
statement changes, the provisions of Rule 416 shall apply to this
registration statement, and this registration statement shall cover the
additional securities resulting from such split, dividend or similar
transaction.
(2) Calculated in accordance with Rule 457(h) on the basis of the exercise
price of options granted to purchase 1,750,000 shares of the registrant's
common stock.
<PAGE> 2
INTRODUCTORY STATEMENT
This Registration Statement on Form S-8 is being filed to register
1,750,000 shares of Common Stock, par value $.001 per share (the "Common
Stock"), of Citadel Communications Corporation (the "Company"), for issuance
upon the exercise of options granted or to be granted under the Company's 1999
Long-Term Incentive Plan.
Pursuant to Rule 428(b)(1), promulgated under the Securities Act of
1933, as amended (the "Securities Act"), the information required by Part I of
Form S-8 will be sent or given to employees, as specified in such Rule, in the
form of a prospectus that meets the requirements of Section 10(a) of the
Securities Act. In accordance with the note which precedes the instructions to
Part I of Form S-8, the documents containing the information specified in Part I
of Form S-8 have not been filed with the Securities and Exchange Commission
either as part of this registration statement or as a prospectus or prospectus
supplement.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities
and Exchange Commission by Citadel Communications Corporation (the "Company")
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
are incorporated herein by reference: (1) the Company's Annual Report on Form
10-K for the year ended December 31, 1998; (2) the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1999; (3) the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999; (4)
the Company's Current Report on Form 8-K (Date of Event: February 16, 1999)
filed February 17, 1999; (5) the Company's Current Report on Form 8-K (Date of
Event: June 25, 1999) filed July 7, 1999; and (6) the description of the
Company's Common Stock, par value $.001 per share, contained in the Company's
Registration Statement on Form 8-A/A under Section 12 of the Exchange Act, filed
on June 30, 1998, as amended by the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1999 and any further amendment or report filed
hereafter for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this registration
statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the Nevada General Corporation Law (the
"NGCL") empowers a corporation to indemnify any person who was or is 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 the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him 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 proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal proceeding, he had reasonable
cause to believe that his conduct was unlawful.
Section 78.7502 of the NGCL also empowers a 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 or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including amounts paid in settlement and attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation unless, and only to the extent
that, the court in which such action or suit was brought or other court of
competent jurisdiction shall determine upon application that in view of all the
circumstances of the case, that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
Section 78.7502 of the NGCL further provides that, to the
extent that a director or officer of a corporation has been successful on the
merits or otherwise, in the defense of any action, suit or proceeding referred
to above or in the defense of any claim, issue or matter therein, he must be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith. Section 78.751 of the NGCL provides
that indemnification provided for by Section 78.7502 of the NGCL shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled, except that such indemnification may not be made to any director or
officer if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action, unless a court of
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<PAGE> 5
competent jurisdiction orders otherwise, utilizing the standard described in the
immediately preceding paragraph.
The articles of incorporation, the bylaws or an agreement made
by the corporation may provide that the expenses of the officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
the officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation; these provisions do not affect any rights to advancement of
expenses to which corporate personnel other than officers and directors may be
entitled under any contract or otherwise by law.
Any discretionary indemnification referred to above, unless
ordered by a court or paid as incurred in advance of final disposition upon
receipt of a proper undertaking to repay the same, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (i) by the stockholders; (ii) by
the board of directors by majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding; (iii) if a majority vote of a
quorum consisting of directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in a written opinion; or (iv)
if a quorum consisting of directors who were not parties to the act, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.
The Company's Amended and Restated Certificate of
Incorporation provides as follows:
To the full extent permitted by law, the Corporation
shall indemnify any person made or threatened to be made a
party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he
or she is or was a director of the Corporation or any
predecessor of the Corporation or serves or served any other
enterprise as director at the request of the Corporation or
any predecessor of the Corporation.
The Company's Bylaws further implement the permissive
provisions of Section 78.751 of the NGCL discussed above.
As permitted by Section 78.037 of the NGCL, the Company's
Amended and Restated Certificate of Incorporation provides as follows:
To the full extent permitted by the General
Corporation Law of the State of Nevada in effect from time to
time and to no greater extent, no officer or member of the
Board of Directors shall be liable for monetary damages for
breach of fiduciary duty in his or her capacity as an officer
or a director in
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<PAGE> 6
any action brought by or on behalf of the Corporation or any
of its shareholders.
Section 78.037 currently provides that any such provision of a
corporation's articles of incorporation may not eliminate or limit the liability
of a director or officer for (a) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law; or (b) the payment of dividends
in violation of the NGCL.
The Company maintains insurance to protect persons entitled to
indemnification pursuant to its Amended and Restated Certificate of
Incorporation and Bylaws and the NGCL against expenses, judgments, fines and
amounts paid in settlement, to the fullest extent permitted by the NGCL.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(i) to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1998).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1998).
5 Opinion of Lionel Sawyer & Collins (including consent).
23.1 Consent of Lionel Sawyer & Collins (included in its opinion filed
herewith as Exhibit 5).
23.2 Consent of KPMG LLP.
24 Power of Attorney (included on signature page).
99.1 Citadel Communications Corporation 1999 Long-Term Incentive Plan.
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<PAGE> 7
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, 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, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement 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.
(h) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-7-
<PAGE> 8
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Lawrence R. Wilson and Donna L. Heffner and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or 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 and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their substitute or substitutes, may lawfully do or cause to be done by venture
hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Las Vegas, State of Nevada, on August 20, 1999.
CITADEL COMMUNICATIONS CORPORATION
By: /s/ LAWRENCE R. WILSON
---------------------------------------
Lawrence R. Wilson
Chairman of the Board, Chief Executive
Officer and President
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<PAGE> 9
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ LAWRENCE R. WILSON Chairman of the Board, Chief August 20, 1999
- ------------------------------------- Executive Officer and
Lawrence R. Wilson President (Principal Executive
Officer)
/s/ DONNA L. HEFFNER Vice President and Chief August 20, 1999
- ------------------------------------- Financial Officer (Principal
Donna L. Heffner Financial and Accounting Officer)
/s/ PATRICIA DIAZ DENNIS Director August 20, 1999
- -------------------------------------
Patricia Diaz Dennis
/s/ IKE KALANGIS Director August 20, 1999
- -------------------------------------
Ike Kalangis
/s/ TED L. SNIDER, SR. Director August 20, 1999
- -------------------------------------
Ted L. Snider, Sr.
/s/ JOHN E. VON SCHLEGELL Director August 20, 1999
- ------------------------------------
John E. von Schlegell
</TABLE>
-9-
<PAGE> 10
CITADEL COMMUNICATIONS CORPORATION
EXHIBIT INDEX
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(i) to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1998).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1998).
5 Opinion of Lionel Sawyer & Collins (including consent).
23.1 Consent of Lionel Sawyer & Collins (included in its opinion filed
herewith as Exhibit 5).
23.2 Consent of KPMG LLP.
24 Power of Attorney (included on signature page).
99.1 Citadel Communications Corporation 1999 Long-Term Incentive Plan.
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<PAGE> 1
Exhibit 5
[Logo]
August 20, 1999
Citadel Communications Corporation
City Center West
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, Nevada 89128
Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
44th Floor
Pittsburgh, Pennsylvania 15219
Re: Registration of 1,750,000 Shares of Common Stock of Citadel
Communications Corporation (the "Company") for Issuance
Pursuant to the Exercise of Options Granted or to be Granted
under the Company's 1999 Long-Term Incentive Plan (the "Plan")
Ladies and Gentlemen:
We are acting as special Nevada counsel for the Company in connection
with the registration by the Company under the Securities Act of 1933, as
amended, of 1,750,000 shares of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock"), for issuance upon the exercise of options granted
or to be granted under the Plan, on a Registration Statement on Form S-8 (the
"Registration Statement").
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. The Law covered by the Opinions
expressed herein is limited to the State of Nevada.
<PAGE> 2
We have examined originals or copies of each of the documents listed
below:
1. Certificate of Corporate Existence of the Company certified by
the Nevada Secretary of State dated August 2, 1999;
2. The Eighth Amended and Restated Articles of Incorporation of
the Company certified by Nevada=s Secretary of State as of
August 2, 1999 ("Articles");
3. The Amended and Restated Bylaws of the Company, dated June 26,
1998, certified by the Company's Secretary as of the date
hereof; and
4. Resolutions of the Company's board of directors dated May 24,
1999.
We have examined originals or copies of such other corporate records
and certificates of corporate officers and public officials as we have deemed
necessary or advisable for purposes of this Opinion Letter. We have relied upon
the certificates of all public officials and corporate officers, including, but
not limited to, the certificate of the Company's Secretary, attached hereto as
Exhibit A, with respect to the accuracy of all factual matters contained
therein.
We have assumed that any option agreement between the Company and a
recipient of any option granted under the Plan is valid, binding and enforceable
under the laws of the jurisdiction governing any such agreement.
Based upon the foregoing, and subject to the following, it is our
opinion that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of
Nevada.
2. The Common Stock, when issued, delivered and paid for as
contemplated by the Plan, will be duly authorized, validly
issued, fully paid and nonassessable.
We express no opinion concerning any securities law or rule. This
Opinion Letter is intended solely for use in connection with the registration of
the Common Stock as described in the Registration Statement, and it may not be
relied upon for any other purpose, or reproduced or filed publicly, without the
written consent of this firm; provided, however, we hereby consent to the filing
of this Opinion Letter as an exhibit to the Registration Statement. In giving
this consent, we do not hereby admit that we are in a category of persons whose
consent is required pursuant to Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
/s/ LIONEL SAWYER & COLLINS
LIONEL SAWYER & COLLINS
<PAGE> 3
Exhibit A
CITADEL COMMUNICATIONS CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, Donna L. Heffner, Secretary of Citadel Communications
Corporation, a Nevada corporation (the "Company"), does hereby certify as of the
date hereof as follows:
1. I am the duly elected and presently acting Secretary of the Company
and as such have had access to the corporate records of the Company and am
familiar with the matters therein contained and herein certified.
2. Attached hereto as Exhibit 1 is a copy of the Company's Eighth
Amended and Restated Articles of Incorporation, certified by Nevada's Secretary
of State as of August 2, 1999. Such articles have not been amended, modified,
annulled or revoked and are in full force and effect.
3. Attached hereto as Exhibit 2 is a copy of the Company's bylaws,
dated June 26, 1998. Such bylaws have not been amended, modified, annulled or
revoked and are in full force and effect.
4. Attached hereto as Exhibit 3 are resolutions of the Company's Board
of Directors dated May 24, 1999. Such resolutions, as they related to the
Citadel Communications Corporation 1999 Long-Term Incentive Plan (the "Plan"),
have not been amended, modified, annulled or revoked and are in full force and
effect.
5. On July 27, 1999, stockholders holding a majority of the shares of
the Company's capital stock entitled to vote on adoption of the Plan present in
person or by proxy at a meeting of the Company's stockholders at which a quorum
was present, approved adoption of the Plan. Such approval has not been amended,
modified, annulled or revoked and remains in full force and effect.
6. The number of shares of the Company's common stock either
outstanding or otherwise reserved does not exceed 37,000,000.
In witness whereof, I have hereunto set my hand this 20th day of
August, 1999.
/s/ DONNA L. HEFFNER
--------------------------
Donna L. Heffner
Secretary
<PAGE> 4
EXHIBIT 1
ARTICLES OF INCORPORATION
[DELETED BUT ON FILE WITH LIONEL SAWYER & COLLINS]
EXHIBIT 2
BYLAWS
[DELETED BUT ON FILE WITH LIONEL SAWYER & COLLINS]
EXHIBIT 3
BOARD RESOLUTIONS
[DELETED BUT ON FILE WITH LIONEL SAWYER & COLLINS]
<PAGE> 1
Exhibit 23.2
The Board of Directors
Citadel Communications Corp.:
We consent to incorporation by reference in the registration statement on Form
S-8 of Citadel Communications Corp. of our report dated March 5, 1999, except as
to the last two paragraphs of Note 17, which are as of March 17, 1999, relating
to the consolidated balance sheets of Citadel Communications Corp. and
subsidiary as of December 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, which report appears in
the December 31, 1998 annual report on Form 10-K of Citadel Communications Corp.
/s/ KPMG LLP
Phoenix, Arizona
August 19, 1999
<PAGE> 1
Exhibit 99.1
CITADEL COMMUNICATIONS CORPORATION
1999 LONG-TERM INCENTIVE PLAN
SECTION I. PURPOSE
The Citadel Communications Corporation Long-Term Incentive Plan (the
"Plan") is intended to be the primary long-term incentive vehicle for senior
management. The Plan is designed to advance the interests of Citadel
Communications Corporation (the "Company") by encouraging senior management to
seek ways to improve efficiencies, spend capital wisely, reduce debt and
generate cash, all of which should combine to cause stock price appreciation.
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") nor is it qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Company's address is City Center West, 7201 Lake Mead Boulevard,
Suite 400, Las Vegas, Nevada 89128.
SECTION II. ADMINISTRATION
a. The Plan is administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). All members of the Committee are
required to be "nonemployee directors" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and "outside
directors" within the meaning of section 162(m)(4)(C)(i) of the Code. For
additional information about the Committee, participants should contact the
Company at the address and telephone number listed above.
b. The Committee selects the participants and determines: (i) when to
grant a stock option award; (ii) the exercise price and the amount of Common
Stock subject to each award; and (iii) the vesting schedule of the award. The
Committee also has authority to construe and amend the Plan and all awards
granted under it, to prescribe, amend and rescind rules and regulations relating
to the Plan, to determine (subject to sections VI, VII and VIII) the terms and
provisions of the awards granted under the Plan (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan.
SECTION III. SHARES SUBJECT TO THE PLAN
a. Options for a total of 1,750,000 shares of the Company's $.001 par
value Common Stock (the "Common Stock") may be granted pursuant to the terms of
the Plan. The Common Stock subject to the Plan may be unissued shares of Common
Stock or shares of issued Common Stock held in the Company's treasury, or both.
<PAGE> 2
b. The number of shares of the Company's Common Stock available upon
the exercise of options granted under the Plan, the maximum number of shares for
which awards may be granted to any one individual and the number of shares of
outstanding awards are subject to appropriate adjustment by the Committee in
accordance with section X.
c. If any award granted under the Plan expires or otherwise terminates
for any reason without having been vested in full, the shares of Common Stock
subject to such awards again become available for issuance upon exercise of
options granted under the Plan.
SECTION IV. DURATION, AMENDMENT, AND TERMINATION
a. The termination or any amendment of the Plan may not impair or
adversely affect, without the consent of the participants, the rights of holders
of outstanding awards. The Board of Directors may terminate the Plan at any
time.
b. The Board of Directors may, from time to time, amend the Plan
without stockholder approval except to the extent that any such amendment fails
to comply with any applicable provision of the Code, ERISA, the Exchange Act or
the rules of Nasdaq or causes the Plan to fail to be treated as qualified
performance-based compensation under applicable Treasury Regulations.
SECTION V. ELIGIBILITY
a. Awards may be granted under the Plan only to executive officers and
senior managers of the Company or any of its subsidiaries. Members of the
Committee are not eligible to receive awards.
b. All awards shall be evidenced by a written Award Agreement between
the Company and the participant that will contain such provisions, in addition
to those contained in the Plan, as may be approved by the Committee.
SECTION VI. TERMS AND CONDITIONS OF AWARDS
a. The Plan provides opportunities for participants to acquire shares
of the Company's Common Stock upon the exercise of options granted under the
Plan if performance goals and continued employment requirements are met. All or
part of any options granted under the Plan may be "incentive stock options," as
defined in Section 422 of the Code, or options that are not "incentive stock
options."
b. The Plan operates over a five-year performance period beginning at
the date of the grant of the option (the "Performance Period"). Under the Plan,
each participant receives an option to acquire a certain number of shares of
Common Stock which can be earned during the Performance Period. The exercise
price of an option initially granted effective as of the consummation of the
Proposed Public Offering, as defined in Section XIV, will be the price per share
to the public in the Proposed Public
2
<PAGE> 3
Offering. The exercise price of any option granted thereafter will be equal to
the mean between the bid and ask quotations for the Company's Common Stock
(referred to herein, together with the price per share to the public in the
Proposed Public Offering, as the "fair market value") on the date the option is
granted, or, if there are no bid or asked quotations on that date, the bid and
ask quotations on the next preceding date for which quotations are available.
The number of shares subject to an option granted to a participant is
established to provide a long-term incentive opportunity which is competitive
with the practices of a cross-section of U.S. companies. If the number of shares
subject to option is not fully earned during the Performance Period, any
remaining opportunity for that option is forfeited.
c. For the full number of shares subject to an option to be earned, the
average stock price (with the average calculated over 20 consecutive trading
days) at any time during the Performance Period must be twice the exercise price
of the option. During the Performance Period, the shares subject to the option
are earned in one-fifth increments for each increase in average stock price
equal to one-fifth of the difference between the option's doubled exercise price
and the option exercise price.
For example, if the exercise price of the option is $30, a participant
would earn the full number of shares subject to the option if the average stock
price at any time during the Performance Period is at least $60. During the
Performance Period, the shares subject to the option are earned in one-fifth
increments as the average stock price increases by an amount equal to $6, which
is one-fifth of the difference between the options doubled exercise price ($60)
and the option's exercise price ($30).
d. Absent any action by the Committee to the contrary, when an
increment of the number of shares subject to an option is earned, that increment
will be subject to a five-year vesting period (the "Vesting Period"). Under the
Vesting Period, one-fifth of the number of shares earned vests, and therefore
becomes exercisable, on each anniversary date after that increment was earned.
The Committee has discretionary authority to alter the normal vesting period
relating to any participant's award or to accelerate the vesting period relating
to any participant's award.
SECTION VII. INCENTIVE STOCK OPTIONS
The terms of any incentive stock options granted under the Plan must
comply with the following additional rules:
a. Employees Only. Incentive stock options may only be granted to
employees (including officers and directors who are also employees) of the
Company or subsidiary.
b. Exercise Price. The exercise price per share of Common Stock shall
be set by the Committee, provided that the exercise price for any incentive
stock option may not be less than the fair market value as of the effective date
of the grant.
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c. Exercise. In no event may any incentive stock option be exercisable
for more than ten years from the date of its grant.
d. Individual Dollar Limitation. The aggregate fair market value
(determined as of the time an award is made) of all shares of Common Stock with
respect to which incentive stock options are first exercisable by a Participant
in any calendar year may not exceed $100,000.00.
e. Ten Percent Owners. An incentive stock option may be granted to a
"ten percent owner," as defined in Code Section 422, provided that at the time
such option is granted, the exercise price per share of Common Stock shall not
be less than 110% of the fair market value and such option by its terms is not
exercisable after the expiration of five (5) years from the date of its grant.
f. Expiration of Incentive Stock Options. No award of an incentive
stock option may be made pursuant to this Plan after the expiration of ten (10)
years from the effective date of the Plan as determined in Section XIV.
g. Right to Exercise. During a participant's lifetime, an incentive
stock option may be exercised only by the participant.
SECTION VIII. TERMINATION OF PARTICIPATION
Notwithstanding the exercise periods set forth in any Award Agreement,
options shall be subject to the following:
a. An option shall lapse ten years after it is granted, unless an
earlier time is set in the Award Agreement.
b. If a participant's employment is terminated due to (i) disability,
(ii) retirement, or (iii) for any other reason, such participant may exercise
his or her incentive stock options only to the extent that such incentive stock
options would have been exercisable on the termination date; provided, that such
exercise is made prior to the earlier of (i) the expiration of three (3) months
(six (6) months in the case of disability) after the termination date or (ii)
the expiration of the option set forth in the Award Agreement.
c. If a participant's employment, contractual or other relationship
with the Company is terminated due to (i) disability, (ii) retirement, or (iii)
for any other reason, such participant may exercise his or her non-qualified
stock options, only to the extent that such options would have been exercisable
on the termination date; provided, that such exercise is made within the
applicable time period for exercise as set forth in the Award Agreement.
d. If a participant dies before his or her options lapse pursuant to
this Section, then the participant's options may be exercised, only to the
extent that such options would have been exercisable on the date of the
Participant's death; provided
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that such exercise is made prior to the earlier of (i) the first anniversary of
such Participant's death or (ii) the expiration date of the Option set forth in
the Award Agreement. Upon the participant's death, any exercisable options may
be exercised by the Participant's legal representative or representatives.
SECTION IX. PAYMENT FOR STOCK PURCHASES; WITHHOLDING TAXES
a. Payment for Common Stock purchased pursuant to the exercise of an
option granted under the Plan may be made in cash (by check) or, where expressly
approved for the participant by the Committee, in an Award Agreement or
otherwise in writing and where permitted by law:
(i) by cancellation of indebtedness of the Company to the
participant;
(ii) by surrender of Common Stock that either: (1) has been
owned by the participant for more than six (6) months and has been paid
for within the meaning of Rule 144 promulgated under the Securities
Act; (2) was obtained by the participant in the public market; or (3)
is otherwise acceptable to the Committee in its discretion;
(iii) by waiver of compensation due or accrued to participant
for services rendered;
(iv) by tender of property acceptable to the Committee;
(v) through a "same day sale" commitment from participant and
a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby participant irrevocably
elects to exercise the option and to sell a portion of the Common Stock
so purchased to pay for the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Common Stock to forward the
exercise price directly to the Company;
(vi) through a "margin" commitment from participant and a NASD
Dealer whereby the participant irrevocably elects to exercise the
option and to pledge the Common Stock so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Stock to forward the exercise price
directly to the Company;
(vii) through any other "cashless exercise" procedure approved
by the Committee; or
(viii) by any combination of the foregoing, or any other
method of payment acceptable to the Committee in its sole discretion.
b. The Committee may, in its discretion and consistent with its
obligations to its existing lenders and all other applicable restrictions, help
the participant pay for
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Common Stock purchased under the Plan by authorizing a guarantee by the Company
of a third-party loan to the participant.
c. The Company or any subsidiary shall have the authority and the right
to deduct or withhold, or require a participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including the
participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
SECTION X. ADJUSTMENTS
The Committee may adjust the number of shares of Common Stock under the
Plan or subject to options granted under the Plan at any time to reflect any
change in the capital structure of the Company affecting all outstanding shares
of Common Stock, whether through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in the capital
structure of the Company. With respect to outstanding awards, such adjustment
shall be made such that the participant shall be made whole and suffer no
dilution in relation to the outstanding shares of Common Stock immediately prior
to any such change.
SECTION XI. CHANGE IN CONTROL
a. In the event of a Change in Control (as defined herein), the Company
will require any successor to fulfill the terms and conditions of the Plan in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. In addition, vesting shall
automatically be deemed to occur on the date which is 30 days prior to a "Change
in Control."
b. For purposes of this Plan, "Change in Control" means each of the
following:
(1) Any transaction, or series of transactions, whereby any
person (as that term is used in section 13 and 14(d)(2) of the Exchange
Act), excluding affiliates of the Company, is or becomes the beneficial
owner (as that term is used in section 13(d) of the Exchange Act),
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities;
(2) Any merger, consolidation, or liquidation of the Company
in which the Company is not the continuing or surviving corporation or
pursuant to which the Common Stock would be converted into cash,
securities, or other property, other than a merger or consolidation
with a wholly owned subsidiary, a reincorporation of the Company in a
different jurisdiction, or other transaction in which there is not
substantial change in the shareholders of the Company and all then
outstanding awards under the Plan are assumed by the successor
corporation, which assumption shall be binding on all Participants; or
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(3) The sale, transfer, or other disposition of all or
substantially all of the assets of the Company.
SECTION XII. RESTRICTIONS ON RESALES
a. An employee shall have no right to sell, assign, transfer, pledge or
otherwise dispose of or encumber any options granted under the Plan except by
will or the laws of descent and distribution, and, if any employee earns any
shares of Common Stock during the first six months of any Performance Period,
the employee shall hold (within the meaning of Rule 16b-3 of the Exchange Act)
such stock at least until the end of such six month period.
b. Since the participants in the Plan would generally be considered
"affiliates" of the Company, as that term is defined in the Rules and
Regulations under the Securities Act of 1933 (the "Securities Act"), shares of
the Company's Common Stock acquired under awards may be subject to restrictions
on resale imposed by the Securities Act. Such shares could be resold under the
terms of Rule 144 of the Rules and Regulations, pursuant to another applicable
exemption, if any, from the registration requirements of the Securities Act, or
pursuant to an effective registration statement, should the Company elect to
prepare and file one with the Securities and Exchange Commission. Rule 144
limits the number of shares which may be sold by an affiliate within a
three-month period. An "affiliate" of the Company is defined by the Rules and
Regulations as a person that "directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
"the Company. Directors, officers, substantial stockholders and others, who by
one means or another have the ability to exercise control over the Company,
maybe deemed to be "affiliates." In connection with the awards, the Company may,
in order to ensure that resales are made in compliance with the Securities Act,
imprint a legend on certificates representing shares awarded to the effect that
the shares may not be resold in the absence of compliance with the applicable
restrictions or a determination that no restrictions are applicable.
c. Notwithstanding any language to the contrary, during the vesting
period a participant shall have the right (subject to section XII(a)) to
transfer all or any portion of the participant's earned options to any of the
following: a revocable living trust primarily for the benefit of the
participant, an irrevocable trust in which the participant is the settlor, or a
partnership in which the participant is a general partner.
SECTION XIII. MISCELLANEOUS
a. No award payable under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan unless the Company shall determine otherwise.
b. The Plan and the grant of awards shall be subject to all applicable
federal and state laws, rules and regulations and to such approval by any
governmental or regulatory agency as may be required.
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c. The terms of the Plan shall be binding upon the Company and its
successors and assigns.
d. Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent of any
provision hereof.
e. Nothing contained in this Plan shall prevent the Company from
adopting or continuing in effect other or additional compensation arrangements.
SECTION XIV. EFFECTIVE DATE
The effective date of the Plan shall be May 24, 1999, subject to (i)
shareholder approval and (ii) the consummation of the Company's currently
proposed public offering of the Common Stock approved by the Company's Board of
Directors on April 28, 1999 (the "Proposed Public Offering"). No awards will be
granted under the Plan after the expiration of ten years from the effective
date.
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