<PAGE> 1
As filed with the Securities and Exchange Commission on October 10, 1996.
REGISTRATION NO. 33-98720
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
MACKIE DESIGNS INC.
(Exact Name of Registrant as Specified in its Charter)
WASHINGTON 91-1432133
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
16220 WOOD-RED ROAD, N.E.
WOODINVILLE, WASHINGTON 98072
(206) 487-4333
(Address of Registrant's Principal Executive Offices) (Zip Code)
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
(Full Title of the Plan)
GREG C. MACKIE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MACKIE DESIGNS INC.
16220 WOOD-RED ROAD, N.E.
WOODINVILLE, WASHINGTON 98072
(206) 487-4333
(Name, Address and Telephone Number Including Area Code of Agent for Service)
----------------------
COPIES TO:
MARK A. VON BERGEN
WEISS, JENSEN, ELLIS & HOWARD
2300 U.S. BANCORP TOWER
111 S.W. FIFTH AVENUE
PORTLAND, OREGON 97204
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information called for in Part I of Form
S-8 will be provided to participants in the Mackie Designs Inc. Amended and
Restated 1995 Stock Option Plan (the "Plan"), adopted by Mackie Designs Inc.
(the "Company"). Such information is not being filed with or included in this
registration statement, in accordance with the rules and regulations of the
Securities and Exchange Commission (the "Commission"). There is also included as
Part I of this Registration Statement a reoffer prospectus relating to the
reoffer and resale of shares of Common Stock of the Company, as permitted by
General Instruction C for Form S-8.
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PROSPECTUS
MACKIE DESIGNS INC.
1,111,700 SHARES OF COMMON STOCK
--------------------------------
This Prospectus relates to the periodic offer and sale by each of the
Selling Shareholders named herein (collectively, the "Selling Shareholders") of
up to an aggregate of 1,111,700 shares (collectively, the "Shares") of the
common stock, no par value ("Common Stock"), of Mackie Designs Inc., a
Washington corporation (the "Company"). The Shares have been or may be acquired
by certain officers or directors who may be deemed affiliates of the Company
pursuant to the Mackie Designs Inc. Amended and Restated 1995 Stock Option Plan
(the "Plan"). See "Selling Shareholders."
The Selling Shareholders may offer the Shares from time to time to
purchasers directly or through underwriters, dealers or agents. The Shares may
be sold at market prices prevailing at the time of sale or at negotiated prices.
See "Plan of Distribution."
The Common Stock, including the Shares, is listed on the Nasdaq
National Market ("NASDAQ") under the symbol "MKIE." The Company will not receive
any of the proceeds from the sale of the Shares by the Selling Shareholders. See
"Use of Proceeds." The address of the principal executive offices of the Company
is 16220 Wood-Red Road, N.E., Woodinville, Washington 98072, and its telephone
number at that address is (206) 487-4333.
SEE "RISK FACTORS" BEGINNING AT PAGE FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED PRIOR TO PURCHASING ANY OF THE SHARES.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------------
The date of this Prospectus is October 10, 1996.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, IF GIVE OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SHARES OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OR DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), the Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-8 (together with all amendments
and exhibits thereto, the "Registration Statement") of which this Prospectus is
a part. This is hereby made for further information. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the registration statement,
reference is hereby made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational and reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy and information statements
and other information with the Commission. The Registration Statement, as well
as such reports, proxy and information statements and other information filed by
the Company with the Commission, may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and at CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 560661-2511. Copies of such material, when filed, may also be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, or from the Commission's Website at
"http://www.sec.gov." Copies of the various documents referred to herein may
also be obtained from the Company, without charge, upon request to the Company
at its principal executive offices.
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION....................................................... 3
DOCUMENTS INCORPORATED BY REFERENCE......................................... 4
RISK FACTORS................................................................ 5
PLAN OF DISTRIBUTION........................................................ 9
SELLING SHAREHOLDERS........................................................ 10
USE OF PROCEEDS............................................................. 11
LEGAL OPINION............................................................... 11
EXPERTS ................................................................... 11
3
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed with the Commission by
the Company are incorporated herein by reference and made a part hereof:
(a) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
(c) The Company's Current Report on Form 8-K dated April 12, 1996.
(d) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(e) Prospectus, dated August 18, 1995, filed pursuant to Rule
424(b) of the Rules and Regulations of the Commission under
the Securities Act on August 18, 1995.
(f) Description of the Company's Common Stock contained in Item 1
of the Registration Statement on Form 8-A filed with the
Commission on July 28, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14, and 15(d) of the Exchange Act, subsequent to the effective date hereof and
prior to the filing of a post-effective amendment hereto that indicates that all
securities offered hereby have been sold or that deregisters all such securities
then remaining unsold, shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of filing of such documents. Any statement
contained herein or in any document 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 to constitute a part of
this registration statement, except as so modified or superseded. Upon the
written or oral request of any person to whom a copy of this registration
statement has been delivered, the Company will provide without charge to such
person a copy of any and all documents (excluding exhibits thereto unless such
exhibits are specifically incorporated by reference into such documents) that
have been incorporated be reference into this registration statement but not
delivered herewith. Request for such documents should be addressed to:
Mackie Designs Inc.
Attention: President
16220 Wood-Red Road, N.E.
Woodinville, Washington 98072
(206) 487-4333
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RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS
RELATING TO THE COMPANY AND THE OFFERING, TOGETHER WITH THE INFORMATION SET
FORTH ELSEWHERE IN THIS PROSPECTUS, PRIOR TO PURCHASING ANY SHARES OF COMMON
STOCK OFFERED HEREBY.
ABILITY TO INTRODUCE NEW PRODUCTS
The market for the Company's products is characterized by frequent
introduction of new products. The Company's past success has depended, and its
future success will depend, in large part on its ability to enhance its existing
products and to introduce new products and features to meet changing customer
requirements and to adapt to evolving technology. There can be no assurance that
the Company will successfully develop such enhancements or products or that the
Company's products will achieve market acceptance. Any delay or failure to
complete development of the Company's products and any failure of the Company's
products to achieve market acceptance would have a material adverse effect on
the Company's results of operations. Furthermore, despite testing by the
Company, quality and reliability problems with new products may arise which may
result in manufacturing rework costs, delays in collecting accounts receivable
and additional service and warranty costs. In addition, the Company may not be
successful in extending its existing manufacturing process to, or developing new
processes for, the manufacture of new products. In certain instances, the
Company has experienced delays in the initial shipments of new products and has
experienced product shortages due to manufacturing capacity limitations.
Although the Company has recently expanded its manufacturing capacity, there can
be no assurance that the Company will in the future be able to produce new
products in sufficient quantities to meet demand on a timely basis. Delays in
new product introductions could adversely affect the Company's results of
operations.
In addition, from time to time the Company may, as it has done in the
past, announce products that upgrade or replace existing products, thus
shortening the life cycle of existing products. Such announcements could cause
customers not to buy, or to defer decisions to buy, the Company's products,
which would have a material adverse effect on the Company's results of
operations.
PRODUCT CONCENTRATION
Although the Company is in the process of broadening the range of its
product offerings, its current products consist solely of mixers and related
products. Mixer products represent a relatively narrow segment of the
professional audio market; moreover, the Company's current products are
generally offered only at mid-range price points within the mixer market. In
addition, one of the Company's product lines represented approximately 45% of
the Company's net sales in 1995. As a result of this product concentration, the
Company's future success will depend in large part on the continued growth of
the mid-range audio mixer market, as well as on its ability to broaden the range
of its product offerings. There can be no assurance that this market will
continue to grow or that the Company will be successful in introducing a wider
assortment of products into the mixer market as well as new markets. In
addition, because the Company has a relatively narrow product line, it is more
vulnerable to the impact of competition and technological change.
RISK OF TECHNOLOGICAL CHANGE
It is possible that technological improvements or innovations by others
could render the Company's current products obsolete or unmarketable. Generally,
audio and video equipment has been shifting to digital storage and manipulation
at an increasingly rapid rate. Yamaha Corporation has introduced a mid-price
audio mixer product incorporating substantial digital technology. Nearly all of
Mackie's current mixers, however, rely on analog technology. The incorporation
of digital or other technology in competitors' products may have a material
adverse effect on the Company's future revenues. In order to remain competitive,
the Company has substantially increased
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its research and development expenditures in 1996. However, there can be no
assurance that the Company will be successful in incorporating digital
technology or developing and marketing, on a timely basis, product modifications
or enhancements or new products that respond effectively to technological
advances by others.
COMPETITION
There is significant competition in the professional audio market. The
Company's major competitors are subsidiaries of Harman International (including
Allen & Heath Brenell Ltd., DOD Electronics Corp. and Soundcraft Ltd.), Sony
Corporation, Yamaha Corporation, Peavey Electronics Corporation, Teac America,
Inc. (Tascam) and SoundTracs PLC. Several of these competitors have
significantly greater development, sales and financial resources than the
Company. Competition in the professional audio mixer market is primarily on the
basis of product quality and reliability, price, ease of use, brand name
recognition and reputation, ability to meet customers' changing requirements and
customer service and support. In addition, evolving technology may result in the
development of new industry standards. Also, competitors have in the past
replicated, and may continue in the future to replicate, the Company's products.
There can be no assurance that the Company will be able to compete successfully
with respect to these factors or that the competitive pressures faced by the
Company will not adversely affect its financial performance.
The Company may in the future experience increased competition from
companies whose products are manufactured in foreign countries where the cost of
manufacturing is significantly less than that of the Company. The location of
the Company's manufacturing facilities solely in the U.S. may prevent it from
successfully responding to such foreign competition.
LIMITED PROTECTION OF TECHNOLOGY AND TRADEMARKS
The Company does not generally rely on proprietary rights associated
with its technology. The Company has filed for patent protection on the designs
of certain of its products, but otherwise neither the Company nor any of its
affiliates owns any patents or patent rights of products developed or marketed
by the Company. The Company relies instead on its established brand name and on
its ability to provide superior products that meet customer demands on a timely
basis. Substantially all of the technology incorporated in the Company's
products is therefore available to third parties, including competitors. As a
result, there are relatively few technological or other barriers to entry, and
the Company's products may be replicated by competitors. There can be no
assurance that current or future competitors will not develop products
substantially identical to the Company's products at lower costs, or that others
will not offer competing products to customers at lower prices.
The Company has recently applied for trademark protection on various
marks including "MACKIE" in the U.S. and in certain foreign countries in which
the Company's products are distributed. There can be no assurance that trademark
protection will be granted in any or all of the countries in which applications
are currently pending, or granted on the breadth of the current description of
goods or use of the marks. The Company has substantial international sales; the
laws of foreign countries treat the protection of proprietary rights and
intellectual property differently from the laws in the U.S. and may not protect
the Company's proprietary or intellectual property rights to the same extent.
The Company has never conducted a comprehensive patent search relating
to the technology used in its products. The Company believes that its products
do not infringe the proprietary rights of others. There can be no assurance,
however, that others will not assert infringement claims against the Company in
the future or that such claims will not be successful.
MANAGEMENT OF GROWTH
Since its inception, the Company has experienced a rapid and
substantial growth in net sales. As a result, it is subject to a variety of
risks associated with rapidly growing businesses. The Company's future success
will
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depend in part on its ability to manage growth in its accounting,
administrative, sales, marketing, product development and manufacturing
organizations. The Company cannot predict the effect that growth may have on any
of these functions. Any failure of the Company's management to manage growth
effectively could have a material adverse effect on the Company's results of
operations.
INTERNATIONAL OPERATIONS
International sales have in the past represented, and are expected in
the future to represent, a significant percentage of the Company's net sales. In
addition, the Company directly purchases certain components from manufacturers
located in foreign countries, principally Japan, and may directly source
additional items outside the U.S. in the future.
Certain of the Company's products and components used in the Company's
products may be subject to changes in customs and tariff regulations that could
have a material adverse effect on the Company's results of operations.
Fluctuations in currency exchange rates have caused, and may in the future
cause, the Company's products to become relatively more expensive to customers
in the affected country, leading to a reduction in sales in that country.
Unfavorable changes in exchange rates have caused, and could in the future
cause, the Company's foreign suppliers to raise the prices of certain components
of the Company's products. The Company's international business and financial
performance may also be materially and adversely affected by the loss or
insolvency of any of its international distributors.
As a result of discounts offered to international distributors, the
Company has experienced lower gross margins on its products sold internationally
than domestically. The Company expects that international sales will account for
a larger portion of the Company's net sales in the future.
The Company relies in part on its international distributors to support
its products in foreign countries. There can be no assurance that these
distributors will be able to provide a sufficient level of support for these
products.
FLUCTUATIONS IN OPERATING RESULTS
The Company has experienced and is expected to continue to experience
fluctuations in its quarterly operating results arising from a number of
factors, including the introduction of new products, the mix of distribution
channels through which the Company's products are sold, the accuracy of
forecasts of end user demand, the Company's ability to obtain sufficient
supplies of sole or limited source components for its products, and general
economic conditions both domestically and internationally. In addition, these
factors may cause fluctuation in the Company's gross margins. The Company's
expense levels are based, in part, on its expectations as to future revenue and,
as a result, net income for a given period could be disproportionately affected
by a reduction in revenue. In addition, the Company's operating results may be
affected by increased research and development expenses in the future. It is
unlikely that the Company's historical growth rate will continue and there can
be no assurance that the Company's historical levels of sales or profitability
will be sustained.
DEPENDENCE ON SUPPLIERS
The Company relies almost exclusively on Panasonic Industrial Company
("Panasonic") for its potentiometers. While the Company is not aware of any
condition, financial or otherwise, that may result in an interruption in, or
cessation of, the supply of potentiometers from Panasonic, there can be no
assurance that such supply will not be interrupted or cease, which could
adversely affect the Company's production capability, as the qualification
process for another manufacturer could take several months. The Company is also
dependent upon a limited number of suppliers for certain other components and
parts used in its products. There can be no assurance that these suppliers will
continue to meet the Company's requirements for these components. The Company
has generally elected to work with a limited number of suppliers and has no
guaranteed supply
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arrangements with such suppliers. The process of qualifying new suppliers could
be lengthy, and no assurance can be given that any additional sources would be
available to the Company on a timely basis. The Company has experienced
interruptions in the supply of certain key components from suppliers which
accordingly delayed product shipments. Any extended interruption or reduction in
the future supply of any key components currently obtained from a single or
limited source could have material adverse effect on the Company's results of
operations in any given period.
DEPENDENCE ON KEY PERSONNEL
The Company's future success will depend in large part on the continued
service of many of its technical, marketing, sales and management personnel and
on its ability to continue to attract, train, motivate and retain highly
qualified employees. Competition for highly qualified employees is intense, and
the process of locating technical, marketing, sales and management personnel
with the combination of skills and attributes required to execute the Company's
strategy is often lengthy. The Company believes that it will need to hire
additional technical personnel in order to enhance its existing products and to
develop new products. If the Company is unable to hire additional technical
personnel, the development of new products and enhancements would likely be
delayed. The loss of the services of key personnel or the inability to attract
new personnel could have a material adverse effect upon the Company's results of
operations.
DEPENDENCE ON REPRESENTATIVES AND DISTRIBUTORS
The Company sells its products through representatives in the U.S. and
through distributors in other countries. Since the Company's products are sold
to the professional audio market, effective representatives and distributors
must possess sufficient technical, marketing and sales resources and must devote
these resources to subsequent dealer support. Only a limited number of
representatives and distributors possess these resources. In addition, certain
of the Company's representatives and distributors sell products that may compete
directly or indirectly with the Company's products. There can be no assurance
that the Company's current representatives and distributors will be able to
continue to market Mackie products effectively, that economic conditions or
industry demand will not adversely affect these or other representatives or
distributors, or that any representative or distributor that sells Mackie's
products will choose to continue to market these products. In addition,
representatives and distributors often have limited financial resources and any
deterioration in their financial condition could expose the Company to increased
risk. In November 1995, the Company began supervising the international
marketing and sales of its products internally. The Company had no prior
experience in supervising the international marketing and sales of its products,
and there can be no assurance that the Company will be successful in so doing.
If any of its representatives or distributors experience financial difficulties,
there may be a material adverse effect on the Company.
SHARES ELIGIBLE FOR FUTURE SALE
The Shares to be offered and sold pursuant to this Prospectus are
eligible for immediate sale in the public market. See "Plan of Distribution." In
addition, 10,250,000 shares of Common Stock are available for immediate sale in
the public market subject to compliance with Rule 144. In general, under Rule
144 as currently in effect, a person (or persons whose shares are aggregated),
including an affiliate, who has beneficially owned shares for at least two years
is entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) 1% of the then outstanding Common Stock or (ii)
the average weekly trading volume in the Common Stock during the four calendar
weeks preceding such sale, subject to the filing of a Form 144 with respect to
such sale and certain other limitations and restrictions. In addition, a person
who is not deemed to have been an affiliate of the Company at any time during
the three months preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least three years, would be entitled to sell such
shares under Rule 144(k) without regard to the volume limitations described
above or certain other restrictions of Rule 144.
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As of October 1, 1996, there were options outstanding to purchase a
total of 1,125,000 shares of Common Stock under the Plan in addition to the
Shares being offered pursuant to this Prospectus. Common Stock issued upon
exercise of outstanding vested options granted pursuant to the Plan will be
available for immediate sale in the public market. Future sales of substantial
amounts of Common Stock in the public market could adversely affect market
prices prevailing from time to time and may make it more difficult for the
Company to raise capital publicly.
NO CASH DIVIDENDS
The Company intends to retain any future earnings for use in its
business and does not anticipate paying any cash dividends in the foreseeable
future.
EFFECT OF ANTITAKEOVER PROVISIONS
Certain provisions of the Company's Restated Articles of Incorporation
and Restated Bylaws and of Washington law could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock. The Company is authorized to issue Preferred Stock,
without shareholder approval, with rights senior to those of the Common Stock
and to impose various procedural and other requirements that could make it more
difficult for shareholders to effect certain corporate actions. In addition,
pursuant to the Company's Restated Bylaws, the Board of Directors is divided
into three classes with staggered three-year terms. The classification of the
Board of Directors may make it more difficult for a third party to gain control
of the Company's Board of Directors. The Company is subject to the antitakeover
provisions of Chapter 23B.19 of the Washington Business Corporation Act, which
prohibit a corporation, subject to certain exceptions, from engaging in
"significant business transactions" with an "Acquiring Person." The Company is
also subject to the "fair price" restriction of Chapter 23B.17 of the Washington
Business Corporation Act, which provides, subject to certain exceptions, that
any merger, sale of substantially all of a corporation's assets or dissolution
or liquidation involving an "Interested Shareholder" will be prohibited unless
determined to be at a "fair price" or otherwise approved by either a majority of
the corporation's disinterested directors or two-thirds of the disinterested
shareholders entitled to vote on the transaction.
PLAN OF DISTRIBUTION
The Shares are being offered by the Selling Shareholders acting as
principals for their own accounts. The Selling Shareholders will offer the
Shares from time to time on Nasdaq or otherwise through broker-dealer firms. Any
such transactions may be effected at prices and at terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders for whom they may act
as agent in such transactions. The Selling Shareholders will bear all discounts,
concessions and commissions incurred by them in the sale of the Shares. The
Selling Shareholders and any broker-dealers that participate in the distribution
of Shares offered hereby may be deemed to be underwriters under the Securities
Act, and any profit on the sale of such securities by them, and any discounts,
concessions or commissions received by any such broker-dealers, may be deemed to
be underwriting discounts and commission under the Securities Act.
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SELLING SHAREHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock by each of the Selling Shareholders as
of October 1, 1996. Unless otherwise indicated, the Company believes that each
person named below has sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by such person, subject to
community property laws where applicable and the information set forth in the
footnotes to the table below.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
NAME AND CURRENT BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
POSITION WITH COMPANY PRIOR TO OFFERING(1) BEING OFFERED AFTER OFFERING(2)
- ------------------------------------------ -------------------- ---------------- -------------------
<S> <C> <C> <C>
Thomas M. Elliott 99,100(3) 99,100 0
Vice President - Finance and Chief
Financial Officer
David E. Firestone 140,500(3) 140,500 0
Vice President - Sales and
Marketing
Walter Goodman 10,000 10,000(4) 10,000
Director
David F. Jones 300(5) 10,000(4) 300
Director
Janet Narduzzi 201,800(3) 201,800 0
Vice President - Administration
Tami L. Pereira 0 30,000(4) 0
Vice President - International Sales
and Marketing
Stephen J. Ripp 0 100,000(4) 0
Executive Vice President -
Chief Operating Officer
Angela M. Rivers 485,300(6) 211,800 0
Vice President - Human Resources
Corey D. Rivers 485,300(7) 273,500 0
Executive Vice President -
Operations
Richard M. Rosenzweig 0 35,000(4) 0
Vice President - Operations
</TABLE>
- ----------
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days of October 1, 1996, the date of
this table, upon the exercise of options.
(2) This table assumes that each Selling Shareholder will sell all of the
shares of Common Stock offered pursuant to this Prospectus, in which
case none of the Selling Shareholders will beneficially own 1% or more
of the outstanding Common Stock after completion of this offering.
There can be no assurance, however, that any Selling Shareholder will
sell all or any of the shares of Common Stock offered by such Selling
Shareholder.
(3) Consists of shares subject to options currently exercisable.
(4) Consists of shares subject to options not exercisable within 60 days of
October 1, 1996.
(5) Includes 300 shares held jointly with Mr. Jones's wife.
(6) Consists of shares subject to options currently exercisable, including
option held by Mr. Rivers's wife, Angela M. Rivers.
(7) Consists of shares subject to options currently exercisable, including
options held by Ms. Rivers's husband, Corey D. Rivers.
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USE OF PROCEEDS
Each Selling Shareholder will receive all of the net proceeds from the
sale of the Shares owned by such Selling Shareholder and offered hereby. The
Company will not receive any of the proceeds from the sale of such Shares.
LEGAL OPINION
The legality of the Shares offered hereby has been passed upon for the
Company by Weiss, Jensen, Ellis & Howard, Portland, Oregon and Seattle,
Washington.
EXPERTS
The financial statements of the Mackie Designs Inc. incorporated by
reference in Mackie Design Inc.'s Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed with the Commission by
the Company are incorporated herein by reference and made a part hereof:
(a) Prospectus, dated August 18, 1995, filed pursuant to Rule
424(b) of the Rules and Regulations of the Commission under
the Securities Act of 1933, as amended (the "Securities Act"),
on August 18, 1995; and
(b) Description of the Company's Common Stock, no par value per
share (the "Common Stock"), contained in Item 1 of the
Registration Statement on Form 8-A filed with the Commission
on July 28, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14, and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the effective date hereof and prior to the filing of a
post-effective amendment hereto that indicates that all securities offered
hereby have been sold or that deregisters all such securities then remaining
unsold, shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in any document 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 to constitute a part of this
registration statement, except as so modified or superseded. Upon the written or
oral request of any person to whom a copy of this registration statement has
been delivered, the Company will provide without charge to such person a copy of
any and all documents (excluding exhibits thereto unless such exhibits are
specifically incorporated by reference into such documents) that have been
incorporated be reference into this registration statement but not delivered
herewith. Request for such documents should be addressed to:
Mackie Designs Inc.
Attention: President
16220 Wood-Red Road, N.E.
Woodinville, Washington 98072
(206) 487-4333
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 10 of the Company's Restated Bylaws (the "Bylaws") requires
indemnification of current or former directors of the Company to the fullest
extent not prohibited by the Washington Business Corporation Act (the "Act").
The effects of the Bylaws and the Act (the "Indemnification Provisions") are
summarized as follows:
II-1
<PAGE> 14
(a) The Indemnification Provisions grant a right of
indemnification in respect of any action, suit or proceeding
(other than an action by or in the right of the Company)
against expenses (including attorney fees), judgments, fines
and amounts paid in settlement actually and reasonably
incurred, if the person concerned acted in good faith and in a
manner the person reasonably believed to be in or not opposed
to the best interest of the Company, was not adjudged liable
on the basis of receipt of an improper personal benefit and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. The
termination of an action, suit or proceeding by judgment,
order, settlement, conviction or plea of nolo contendere does
not, of itself, create a presumption that the person did not
meet the required standards of conduct.
(b) The Indemnification Provisions grant a right of
indemnification in respect of any action or suit by or in the
right of the Company against the expenses (including attorney
fees) actually and reasonably incurred if the person concerned
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
Company, except that no right of indemnification will be
granted if the person is adjudged to be liable to the Company.
(c) Every person who have been wholly successful on the merits of
a controversy described in (a) or (b) above is entitled to
indemnification as a matter of right.
(d) Because the limits of permissible indemnification under
Washington law are not clearly defined, the Indemnification
Provisions may provide indemnification broader than that
described in (a) and (b).
(e) The Company may advance to a director the expenses incurred in
defending any action, suit or proceeding in advance of its
final disposition if the director affirms in good faith that
he or she has met the standard of conduct to be entitled to
indemnification as described in (a) or (b) above and
undertakes to repay any amount advanced if it is determined
that the person did not meet the required standard of conduct.
(f) The Board of Directors may by action from time to time
indemnify its officers, employees or agents to the same extent
as set forth above.
The Company maintains insurance for the protection of its directors,
officers, employees and agents against any liability asserted against them in
their official capacities. The rights of indemnification described above are not
exclusive of any other rights of indemnification to which the persons
indemnified may be entitled under any bylaw, agreement, vote of shareholders or
directors or otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
3(i) Restated Articles of Incorporation of Mackie Designs Inc. (the
"Company"). Incorporated by reference to Exhibit 3.1 to the
Company's Registration on Form S-1, File No. 33-93514, as
amended.
3(ii) Restated Bylaws of the Company. Incorporated by reference to
Exhibit 3.2 to the Company's Registration on Form S-1, File
No. 33-93514, as amended.
*4.1 Mackie Designs Inc. Amended and Restated 1995 Stock Option Plan.
II-2
<PAGE> 15
+5.1 Opinion of Weiss, Jensen, Ellis & Howard.
*23.1 Consent of Ernst & Young LLP.
+23.2 Consent of Weiss, Jensen, Ellis & Howard (included in their
opinion filed as Exhibit 5.1 hereto).
+24.1 Powers of Attorney.
- --------------------
*Filed herewith
+Previously filed
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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;
(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 (1)(a)(i) and (1)(a)(ii) 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 Exchange Act that are incorporated by
reference in this registration statement.
(b) 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.
(c) 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.
2. 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.
3. 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 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
II-3
<PAGE> 16
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.
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 Amendment
No. 1 to registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Seattle, State of Washington, on
October 10, 1996.
MACKIE DESIGNS INC.
By: /s/ Greg C. Mackie
-------------------------------------
Greg C. Mackie
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to registration statement has been signed below by the
following persons in the capacities indicated on October 10, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Greg C. Mackie President, Chief Executive Officer and Director
- -------------------------------- (Principal Executive Officer)
Greg C. Mackie
/s/ Thomas M. Elliott Vice-President - Finance and
- -------------------------------- Chief Financial Officer
Thomas M. Elliott (Principal Financial and Accounting Officer)
*David M. Tully
- --------------------------------
David M. Tully Treasurer and Director
*Walter Goodman
- --------------------------------
Walter Goodman Director
*David F. Jones
- --------------------------------
David F. Jones Director
*C. Marcus Sorenson
- --------------------------------
C. Marcus Sorenson Director
*By: /s/ Greg C. Mackie
- --------------------------------
Greg C. Mackie, Attorney-in-Fact
</TABLE>
II-4
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- -----------------------------------------------------------
<S> <C>
3(i) Restated Articles of Incorporation of Mackie Designs Inc. (the
"Company"). Incorporated by reference to Exhibit 3.1 to the
Company's Registration on Form S-1, File No. 33-93514, as
amended.
3(ii) Restated Bylaws of the Company. Incorporated by reference to
Exhibit 3.2 to the Company's Registration on Form S-1, File
No. 33-93514, as amended.
*4.1 Mackie Designs Inc. Amended and Restated 1995 Restated Stock
Option Plan.
+5.1 Opinion of Weiss, Jensen, Ellis & Howard.
*23.1 Consent of Ernst & Young LLP.
+23.2 Consent of Weiss, Jensen, Ellis & Howard (included in their
opinion filed as Exhibit 5.1 hereto).
+24.1 Powers of Attorney.
</TABLE>
- --------------------
*Filed herewith
+Previously filed
<PAGE> 1
Exhibit 4.1
MACKIE DESIGNS INC.
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
1. PURPOSES. The purposes of this Mackie Designs Inc. Amended and
Restated 1995 Stock Option Plan ("Plan") are to:
1.1 Closely associate interests of the management of Mackie
Designs Inc. ("Company") with the shareholders by reinforcing the
relationship between participants' rewards and shareholder gains;
1.2 Provide management with an equity ownership in the Company
commensurate with the Company's performance as reflected in increased
value of its common shares;
1.3 Maintain competitive compensation levels;
1.4 Provide a means whereby the Company can continue to
attract, motivate, and retain key employees who can contribute
materially to the Company's growth and success; and
1.5 Provide a means whereby the Company can continue to
attract, motivate and retain the services of selected non-employee
agents, consultants, advisors, persons involved in the sale or
distribution of the Company's products and independent contractors of
the Company.
2. ADMINISTRATION. This Plan shall be administered by the Board of
Directors of the Company ("Board") or, in the event the Board shall appoint
and/or authorize a committee to administer this Plan, by a committee of the
Board consisting of at least two (2) non-employee directors ("Committee"). The
administrator of this Plan, whether the Board or Committee, shall hereinafter be
referred to as the "Plan Administrator." The Plan Administrator shall administer
the Plan in accordance with the following:
2.1 Incapacity of Plan Administrator. No member of the Board
or the Committee shall vote with respect to the granting of an option
created under this Plan ("Option(s)") to himself or herself. Any Option
granted to a director for his or her services as such shall not be
effective until approved by the full Board.
2.2 Registration Under The Securities Act. If the Company
registers any of its equity securities pursuant to Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") and any officers or directors are eligible to receive Options,
the following provisions shall apply to the administration of this Plan
with respect to grants made to directors, officers or other Optionees
(as hereinafter defined)
Page 1 of 13 - STOCK OPTION PLAN
<PAGE> 2
affected by Section 16(b) of the Exchange Act. The Plan Administrator
shall be constituted at all times so as to meet the requirements of
Section 16(b) of the Exchange Act, as amended from time to time. The
members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The
Board may from time to time remove members from, or add members to, the
committee. Vacancies on the committee, however caused, may be filled by
the Board. Currently, the Plan Administrator is a Committee, of which
all members are disinterested. If, at any time, an insufficient number
of disinterested non-employee directors is available to serve on such
committee, interested non-employee directors may serve on the
committee; however, during such time, no Options shall be granted to
any person if the granting of such Option would not meet the
requirements of Section 16(b) of the Exchange Act. For purposes of this
Section 2, a disinterested director shall be a member of the Board who
meets the definition of "disinterested person" as set forth in the
rules and regulations promulgated under Section 16(b) of the Exchange
Act, as amended from time to time (the "16(b) Rules"). Currently, a
disinterested director for purposes of this Section 2 is a member of
the Board who for one (1) year prior to service as an administrator of
this Plan has not been (and during service as a Plan Administrator,
will not be) granted or awarded equity securities, including options
for equity securities pursuant to this Plan or any other plan of the
Company or its affiliates, except for certain exclusions described in
Rule 16b-3. For purposes of this Section 2, a non-employee director
shall be a member of the Board who meets the definition of
"non-employee director" as set forth in the 16(b) Rules. Currently, a
non-employee director is a member of the Board who (i) is not currently
an officer of the Company or a parent or subsidiary of the Company, or
otherwise currently employed by the Company or a parent or subsidiary
of the Company; (ii) does not receive compensation, either directly or
indirectly, from the Company or a parent or subsidiary of the Company,
for services rendered as a consultant or in any capacity other than as
a director, except for an amount that does not exceed the dollar amount
for which disclosure would be required pursuant to Item 404(a) of
Regulation S-K promulgated under the Exchange Act ("S-K"); (iii) does
not possess an interest in any other transaction for which disclosure
would be required pursuant to Item 404(b) of S-K; and (iv) is not
engaged in a business relationship for which disclosure would be
required pursuant to Item 404(b) of S-K.
2.3 Procedures. The Board may designate one of the members of
the Plan Administrator as chairman. The Plan Administrator may hold
meetings at such times and places as it shall determine. The acts of a
majority of the members of the Plan Administrator present at meetings
at which a quorum exists, or acts reduced to or approved in writing by
all Plan Administrator members, shall be valid acts of the Plan
Administrator.
2.4 Responsibilities. Except for the terms and conditions
explicitly set forth in this Plan, the Plan Administrator shall have
the authority, in its discretion, to determine all matters relating to
the Options, including selection of the individuals to be granted
Options, the number of shares to be subject to each Option, the
exercise price
Page 2 of 13 - STOCK OPTION PLAN
<PAGE> 3
for such Option ("Exercise Price"), and all other terms and conditions
of the Options. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any Option, or
of any rule or regulation promulgated in connection with this Plan,
shall be conclusive and binding on all interested parties, so long as
such interpretation and construction with respect to incentive stock
options correspond to the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code"), and the regulations issued
thereunder, and any amendment or successor sections or regulations.
2.5 Section 16(b) Compliance and Bifurcation of Plan. If the
Company registers any of its equity securities pursuant to Sections
12(b) and 12(g) of the Exchange Act, it is the intention of the Company
that this Plan then comply in all respects with Rule 16b-3 under the
Exchange Act and, if any Plan provision is later found not to be in
compliance with such Section , the provision shall be deemed null and
void. In all events, the Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3. Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to participants who are officers and directors
subject to Section 16(b) of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other participants.
3. STOCK SUBJECT TO THIS PLAN. The stock subject to this Plan shall be
the Company's common stock ("Common Stock"). The Company shall have authorized
and have in reserve for issuance at the time of exercise of any Option a
sufficient number of shares of Common Stock to meet the Company's obligation.
The maximum number of shares of Common Stock which may be issued under the Plan
shall be three million (3,000,000). If any Option expires or is surrendered,
exchanged for another Option, cancelled or terminated for any reason without
having been exercised in full, the unpurchased shares subject to such Option
shall again be available for purposes of this Plan, including for replacement
Options which may be granted in exchange for such expired, exchanged,
surrendered, cancelled or terminated Options.
4. ELIGIBILITY. An incentive stock option in accordance with Section
422 of the Code ("Incentive Option") may be granted only to an individual who,
at the time the option is granted, is an employee of the Company and who the
Plan Administrator may from time to time select for participation in this Plan.
Members of the Board shall not be eligible for grants of Incentive Options
unless they are also employees of the Company. At the discretion of the Plan
Administrator, employees, officers, directors of the Company (including
non-employee directors), selected non-employee agents, consultants, advisors,
persons involved in the sale or distribution of the Company's products and
independent contractors of the Company also may receive stock options which are
not qualified under Section 422 of the Code ("Nonqualified Option") (Qualified
and Nonqualified Options are included collectively within the term "Options" as
used in this Plan). Any party to whom an Option is granted shall be referred to
as an "Optionee."
Page 3 of 13 - STOCK OPTION PLAN
<PAGE> 4
5. TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan
shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, Option agreements shall include or incorporate by reference the
following terms and conditions:
5.1 Number of Shares. Each Option agreement shall state the
number of
shares of stock subject to the Option;
5.2 Option Price. The Option agreement shall state the
Exercise Price per share, and the Plan Administrator shall act in good
faith to establish the Exercise Price as follows:
5.2.1 Incentive Options. Subject to subsection 5.2.3,
the Exercise Price of Incentive Options shall be not less than
the fair market value per share of the Common Stock at the
time the Incentive Option is granted;
5.2.2 Incentive Options to Greater than 10%
Shareholders. With respect to Incentive Options granted to
shareholders then holding greater than ten percent (10%) of
the then-issued and outstanding shares of voting stock of the
Company, the Exercise Price shall be as required by Section 6;
5.2.3 Fair Market Value. With respect to Incentive
Options, the fair market value per share of the Common Stock
shall be determined by the Plan Administrator in good faith at
the time the Incentive Option is granted.
5.2.4 Nonqualified Options. The Exercise Price of
Nonqualified Options shall be as is determined by the Plan
Administrator in good faith at the time of their issuance.
5.3 Term, Maturity and Vesting. Subject to the restrictions
contained in Sections 5.8 and 6, the term of each Incentive Option
shall be ten (10) years from the date it is granted unless a shorter
period of time is established by the Plan Administrator, but in no
event shall the term of any Incentive Option exceed ten (10) years. The
term of each Nonqualified Option shall also be ten (10) years from the
date it is granted unless a shorter period of time is established by
the Plan Administrator. The Plan Administrator shall specify which
Options granted hereunder are Incentive Options and which are
Nonqualified Options.
No Option shall be exercisable until it has vested. The
vesting schedule for each Option shall be specified by the Plan
Administrator at the time of grant; provided, that if no vesting
schedule is specified at the time of grant, the Option shall vest
according to the following schedule:
Page 4 of 13 - STOCK OPTION PLAN
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF YEARS PERCENTAGE OF
FOLLOWING DATE OF GRANT TOTAL OPTION VESTED
- --------------------------------- --------------------------
<S> <C>
One 25%
Two 50%
Three 75%
Four 100%
</TABLE>
The Plan Administrator may specify a vesting schedule for all
or any portion of an Option based on the achievement of performance
objectives established in advance of the commencement by the Optionee
of services related to the achievement of the performance objectives.
Performance objectives shall be expressed in terms of one or more of
the following: return on equity, return on assets, share price, market
share, sales, earnings per share, costs, net earnings, net worth,
inventories, cash and cash equivalents, gross margin or the Company's
performance relative to its internal business plan. Performance
objectives may be in respect of the performance of the Company as a
whole (whether on a consolidated or unconsolidated basis), a related
corporation, or a subdivision, operating unit, product or product line
of either of the foregoing. Performance objectives may be absolute or
relative and may be expressed in terms of a progression or a range. An
option which is exercisable (in whole or in part) upon the achievement
of one or more performance objectives may be exercised only following
written notice to the Optionee and the Company by the Plan
Administrator that the performance objective has been achieved.
5.4 Exercise. Subject to the limitations on exercise described
in subsection 5.3 above and any additional holding period required by
applicable law, each Option may be exercised in whole or in part;
provided, however, that only whole shares will be issued pursuant to
the exercise of any Option. During an Optionee's lifetime, any Options
granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Options shall be exercised by delivery to the
Company of a written notice of the number of shares with respect to
which the Option is to be exercised, together with payment of the
Exercise Price in accordance with Section 5.5.
5.5 Payment of Exercise Price. Payment of the Exercise Price
shall be made in full at the time the written notice of exercise of an
Option is delivered to the Company, and shall be in cash, bank
certified or cashier's check or personal check (unless at the time of
exercise the Plan Administrator in a particular case determines not to
accept a personal check) for the Common Stock being purchased. The Plan
Administrator can determine in its discretion (i) at the time an
Incentive Option is granted, or (ii) at any time before exercise of
Nonqualified Options, that additional forms of payment will be
permitted, including installment payments on such terms and over such
period as the Plan Administrator may determine. To the extent permitted
by the Plan Administrator and applicable laws and regulations
(including, but not limited to, federal tax and securities laws and
regulations and state corporate law), an option may be exercised by:
Page 5 of 13 - STOCK OPTION PLAN
<PAGE> 6
5.5.1 Delivery of Common Stock. Delivery of shares of
Common Stock held by an Optionee having a fair market value
equal to the Exercise Price, such fair market value to be
determined in good faith by the Plan Administrator;
5.5.2 Delivery of Promissory Note. Delivery of a
full-recourse promissory note executed by the Optionee;
provided that (i) such note if delivered in connection with an
Incentive Option shall, and such note if delivered in
connection with a Nonqualified Option may, bear interest at a
rate specified by the Plan Administrator, but in no case less
than the rate required to avoid imputation of interest (taking
into account any exceptions to the imputed interest rules) for
federal income tax purposes; (ii) the Plan Administrator shall
specify the term and other provisions of such note at the time
an Incentive Option is granted or at any time prior to
exercise of a Nonqualified Option; (iii) the Plan
Administrator may require that the Optionee pledge the
Optionee's shares to the Company for the purpose of securing
the payment of such note, and may require that the certificate
representing such shares be held in escrow to perfect the
Company's security interest; (iv) the note provides that
ninety (90) days following the Optionee's termination of
employment with the Company or a related Corporation, the
entire outstanding balance under the note shall become due and
payable, if not previously due and payable; and (v) the Plan
Administrator in its sole discretion may at any time after
granting an Option restrict or rescind the right to pay using
a promissory note upon written notification to any Optionee;
5.5.3 Delivery of Sale Proceeds. Delivery of a
properly executed written exercise notice, together with
irrevocable instructions to a broker, all in accordance with
the regulations of the Federal Reserve Board, to promptly
deliver to the Company the amount of sale or loan proceeds to
pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with
the exercise; provided, that the Plan Administrator may at any
time determine that this section 5.5.3, to the extent the
instructions to the broker call for an immediate sale of the
shares, shall not be available to any Optionee who is subject
to Section 16(b) of the Exchange Act if such transaction would
result in a violation of Section 16(b), or if such Optionee is
not an employee at the time of exercise;
5.5.4 Delivery of Withholding Notice. Delivery of a
properly executed written exercise notice together with
instructions to the Company to withhold upon exercise, from
the shares that would otherwise be issued, that number of
shares having a fair market value equal to the Exercise Price.
5.6 Withholding Tax Requirement. The Company or any related
entity shall have the right to retain and withhold from any payment of
cash or Common Stock under this Plan the amount of taxes required by
any government to be withheld or otherwise deducted and paid with
respect to such payment. At its discretion, the Company may
Page 6 of 13 - STOCK OPTION PLAN
<PAGE> 7
require an Optionee receiving shares of Common Stock to reimburse the
Company for any such taxes required to be withheld by the Company, and
may withhold any distribution in whole or in part until the Company is
so reimbursed. In lieu of such withholding or reimbursement, the
Company shall have the right to withhold from any other cash amounts
due or to become due from the Company to the Optionee an amount equal
to such taxes or to retain and withhold a number of shares having a
market value not less than the amount of such taxes required to be
withheld by the Company to reimburse the Company for any such taxes and
cancel (in whole or in part) any such shares so withheld. If required
by Section 16(b) of the Exchange Act, the election to pay withholding
taxes by delivery of shares held by any person who at the time of
exercise is subject to Section 16(b) of the Exchange Act, shall be made
during the quarterly 10-day window period required under Section 16(b)
of the Exchange Act for exercises of stock appreciation rights.
5.7 Non-assignability of Option. Options and the rights and
privileges conferred by this Plan shall not be transferred, assigned or
pledged in any manner (whether by operation of law or otherwise) other
than (i) by will or by the applicable laws of descent and distribution,
or (ii) by gift to members of the Optionee's family, including
grandparents, parents, spouses, siblings, children, grandchildren and
great-grandchildren, or trusts for the benefit of such family members,
or to charitable organizations, and shall not be subject to execution,
attachment or similar process. Any attempt to transfer, assign, pledge
or otherwise dispose of any Option or of any right or privilege
conferred by this Plan, contrary to the Code or to the provisions of
this Plan, or the sale or levy or any attachment or similar process
upon the rights and privileges conferred by this Plan shall be null and
void. Notwithstanding the foregoing, an Optionee may, during the
Optionee's lifetime, designate a person who may exercise the Option
after the Optionee's death by giving written notice of such designation
to the Plan Administrator. Such designation may be changed from time to
time by the Optionee giving written notice to the Plan Administrator
revoking any earlier designation and making a new designation. In the
event that no such designation is made, the executor or personal
representative of the Optionee's estate shall have any rights then
remaining to the Optionee or his estate under this Plan.
5.8 Duration of Option. Vested Options shall terminate, to the
extent not previously exercised, upon the occurrence of the first of
the following events: (i) the expiration of the Option, as designated
by the Plan Administrator in accordance with Section 5.3 above; (ii)
the date of an Optionee's termination of employment with the Company or
any related corporation for cause (as determined in the sole discretion
of the Plan Administrator); (iii) the expiration of ninety (90) days
from the date of an Optionee's termination of employment with the
Company or any related corporation for any reason whatsoever other than
cause, death or Disability (as defined below) unless the exercise
period is extended by the Plan Administrator until a date not later
than the expiration date of the Option; or (iv) the expiration of one
year from (A) the date of death of the Optionee or (B) cessation of an
Optionee's employment by reason of
Page 7 of 13 - STOCK OPTION PLAN
<PAGE> 8
Disability (as defined below) unless, the exercise period is extended
by the Plan Administrator until a date not later than the expiration
date of the Option. If an Optionee's employment is terminated by death,
any Option held by the Optionee shall be exercisable only by the person
or persons to whom such Optionee's rights under such Option shall pass
by the Optionee's will or by the laws of descent and distribution of
the state or county of the Optionee's domicile at the time of death.
For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean any physical, mental or other health condition
which substantially impairs the Optionee's ability to perform his or
her assigned duties for one hundred twenty (120) days or more in any
two hundred forty (240) day period or that can be expected to result in
death. The Plan Administrator shall determine whether an Optionee has
incurred a Disability on the basis of medical evidence acceptable to
the Plan Administrator. Upon making a determination of Disability, the
Plan Administrator shall, for purposes of the Plan, determine the date
of an Optionee's termination of employment.
Unless accelerated in accordance with Section 7, unvested
Options shall terminate immediately upon termination of employment of
the Optionee by the Company for any reason whatsoever, including death
or Disability. For purposes of this Plan, transfer of employment
between or among the Company and/or any related corporation shall not
be deemed to constitute a termination of employment with the Company or
any related corporation. For purposes of this subsection with respect
to Incentive Stock Options, employment shall be deemed to continue
while the Optionee is on military leave, sick leave or other bona fide
leave of absence (as determined by the Plan Administrator). The
foregoing not withstanding, employment shall not be deemed to continue
beyond the first ninety (90) days of such leave, unless the Optionee's
re-employment rights are guaranteed by statute or by contract.
5.9 Status of Shareholder. Neither the Optionee nor any party
to which the Optionee's rights and privileges under the Option may pass
shall be, or shall have any of the rights or privileges of, a
shareholder of the Company with respect to any of the shares issuable
upon the exercise of any Option unless and until such Option has been
exercised.
5.10 Right to Terminate Employment. Nothing in this Plan or in
any Option shall confer upon any Optionee any right to continue in the
employ of the Company or of a related entity, or to interfere in any
way with the right of the Company or of any related corporation to
terminate, at will, his or her employment or other relationship with
the Company at any time.
5.11 Modification and Amendment of Option. Subject to the
requirements of Code Section 422 with respect to Incentive Options and
to the terms, conditions and limitations of this Plan, the Plan
Administrator may modify or amend outstanding Options. The modification
or amendment of an outstanding Option shall not, without the consent of
the Optionee, impair or diminish any of his or her rights or any of the
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<PAGE> 9
obligations of the Company under such Option. Except as otherwise
provided in this Plan, no outstanding Option shall be terminated
without the consent of the Optionee. Unless the Optionee agrees
otherwise, any changes or adjustments made to outstanding Incentive
Options shall be made in such a manner so as not to constitute a
"modification" as defined in Code Section 424(h) and so as not to cause
any Incentive Option to fail to continue to qualify as an "incentive
stock option" as defined in Code Section 422(b).
5.12 Limitation on Value for Incentive Options. As to all
Incentive Options, to the extent that the aggregate fair market value
of the Common Stock with respect to which Incentive Options are
exercisable for the first time by the Optionee during any calendar year
(under this Plan and all other incentive stock option plans of the
Company, a related corporation or a predecessor corporation) exceeds
$100,000, those Options (or the portion of an Option) beyond the
$100,000 threshold shall be treated as Nonqualified Options. If the
Internal Revenue Service publicly rules, issues a private ruling to the
Company, any Optionee, or any legatee, personal representative or
distributee of an Optionee or issues regulations changing or
eliminating such annual limit, the dollar limitation in the preceding
sentence shall be adjusted correspondingly.
6. GREATER THAN 10% SHAREHOLDERS. In the case of Incentive Options
granted to employees who own at the time of their grant ten percent (10%) or
more of the then-issued and outstanding voting stock of the Company, the
following rules shall apply:
6.1 Exercise Price and Term of Incentive Options. If Incentive
Options are granted to employees who own more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company
or any related corporation, the term of such individual's Incentive
Options shall not exceed five (5) years and the Exercise Price shall be
not less than one hundred ten percent (110%) of the fair market value
of the Common Stock at the time the Incentive Option is granted. This
provision shall control notwithstanding any contrary terms contained in
an Option agreement or any other document.
6.2 Attribution Rule. For purposes of subsection 6.1, in
determining stock ownership, an employee shall be deemed to own such
shares as are owned by those persons or entities defined in Code
Section 424. For purposes of this Section 6, stock owned by an employee
shall include all stock actually issued and outstanding immediately
before the grant of the Incentive Option to the employee.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number and
class of shares for which Options may be granted under this Plan, the number and
class of shares covered by each outstanding Option and the Exercise Price per
share thereof (but not the total price), and each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split-up or consolidation
of shares or any like capital adjustment, or the payment of any stock dividend.
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<PAGE> 10
7.1 Effect of Liquidation, Reorganization or Change in
Control.
7.1.1 Cash, Stock or Other Property for Stock. Except
as provided in subsection 7.1.2, upon a merger (other than a
merger of the Company in which the holders of Common Stock
immediately prior to the merger have the same proportionate
ownership of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a
mere reincorporation or the creation of a holding company) or
liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other
property in exchange for or in connection with their shares of
Common Stock, any Option granted under this Plan shall
terminate, but the Optionee shall have the right immediately
prior to any such merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation
to exercise such Option in whole or in part, to the extent the
vesting requirements set forth in the Option agreement have
been satisfied, unless stated otherwise in the Optionee's
individual Option agreement.
7.1.2 Conversion of Options on Stock for Stock
Exchange. If the shareholders of the Company receive capital
stock of another corporation ("Exchange Stock") in exchange
for their shares of Common Stock in any transaction involving
a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have
the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation or
reorganization (other than a mere reincorporation or the
creation of a holding company), all Options granted under this
Plan shall be converted into options to purchase shares of
Exchange Stock unless the Company and the Corporation issuing
the Exchange Stock, in their sole discretion, determine that
any or all such Options shall not be converted into options to
purchase shares of Exchange Stock, but instead shall terminate
in accordance with the provisions of subsection 7.1.1. The
amount and price of converted options shall be determined by
adjusting the amount and price of the Options in the same
proportion as used for determining the number of shares of
Exchange Stock the holders of the Common Stock receive in such
merger, consolidation, acquisition of property or stock,
separation or reorganization. Unless accelerated by the Board,
the exercise limitations set forth in the Option agreement and
the Plan shall continue to apply for the Exchange Stock.
7.1.3 Change in Control. In the event of a "Change in
Control", as defined below, of the Company, unless otherwise
determined by the Board prior to the occurrence of such Change
in Control, any Options or portions of such Options
outstanding as of the date such Change in Control is
determined to have
Page 10 of 13 - STOCK OPTION PLAN
<PAGE> 11
occurred that are not yet fully vested on such date shall
become immediately exercisable in full.
7.1.4 Definition of "Change in Control". For purposes
of this Plan, a "Change in Control" shall mean (a) the first
approval by the Board or by the stockholders of the Company of
an Extraordinary Event, (b) a Purchase, or (c) a Board Change.
For purposes of the Plan such terms shall have the following
meanings:
7.1.4.1 an "Extraordinary Event" shall mean
any of the following actions: (i) any consolidation
or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant
to which shares of Common Stock would be converted
into cash, securities or other property, other than a
merger of the Company in which the holders of Common
Stock immediately prior to the merger have the same
proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions)
of all, or substantially all, the assets of the
Company; or, (iii) the adoption of any plan or
proposal for liquidation or dissolution of the
Company.
7.1.4.2 a "Purchase" shall mean the
acquisition by any person (as such term is defined in
Section 13(d) of the Exchange Act) of any shares of
Common Stock or securities convertible into Common
Stock without the prior approval of a majority of the
Continuing Directors (as defined below) of the
Company, if after making such acquisition such person
is the beneficial owner (as such term is defined in
Rule 13d-3 under the Exchange Act) directly or
indirectly of Securities of the Company representing
twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities
(calculated as provided in paragraph (d) of such Rule
13d-3).
7.1.4.3 a "Board Change" shall have occurred
if individuals who constitute the Board of the
Company at the time of adoption of this Plan (the
"Continuing Directors") cease for any reason to
constitute at least a majority of the Board, provided
that any person becoming a Director subsequent to the
date of adoption of this Plan whose nomination for
election was approved by a vote of at least a
majority of the Continuing Directors (other than a
nomination of an individual whose initial assumption
of office is in connection with an actual threatened
election contest relating to the election of the
Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act)
shall be deemed to be a Continuing Director.
Page 11 of 13 - STOCK OPTION PLAN
<PAGE> 12
7.2 Fractional Shares. In the event of any adjustment in the
number of shares covered by any Option, any fractional shares resulting
from such adjustment shall be disregarded and each such Option shall
cover only the number of full shares resulting from such adjustment.
7.3 Determination of Board to Be Final. All Section 7
adjustments shall be made by the Board, and its determination as to
what adjustments shall be made, and the extent of such adjustments,
shall be final, binding and conclusive. Unless an Optionee agrees
otherwise, any change or adjustment to an Incentive Option shall be
made in such a manner so as not to constitute a "modification" as
defined in Code Section 424(h) and so as not to cause his or her
Incentive Option to fail to continue to qualify as an incentive stock
option as defined in Code Section 422(b).
8. SECURITIES REGULATION. Shares shall not be issued with respect to an
Option unless the exercise of such Option and the issuance and delivery of such
shares pursuant to the exercise of such Option shall comply with all relevant
provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance,
including the availability of an exemption from registration for the issuance
and sale of any shares under this Plan. Inability of the Company to obtain from
any regulatory body having jurisdiction, the authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares under
this Plan or the unavailability of an exemption from registration for the
issuance and sale of any shares under this Plan shall relieve the Company of any
liability in respect of the non- issuance or sale of such shares as to which
such requisite authority shall not have been obtained.
As a condition to the exercise of any Option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER. Should any of the Company's capital stock of the same class as the
stock subject to Options be listed on a national securities exchange, all stock
issued under this Plan if not previously listed on such exchange shall be
authorized by that exchange for listing on such exchange prior to the issuance
of such stock.
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<PAGE> 13
9. AMENDMENT AND TERMINATION. This Plan may be amended from time to
time as follows:
9.1 Board Action. The Board may at any time suspend, amend or
terminate this Plan; provided, that except as set forth in Section 7,
the approval of the Company's shareholders is necessary within twelve
(12) months before or after the adoption by the Board of any amendment
which will:
9.1.1 increase the number of shares which are to be
reserved for the issuance of Options;
9.1.2 permit the granting of stock options to a class
of persons other than those presently permitted to receive
Options; or,
9.1.3 require shareholder approval under applicable
law, including Section 16(b) of the Exchange Act.
Any amendment made to this Plan which would constitute a "modification"
to Incentive Options outstanding on the date of such amendment, shall
not be applicable to such outstanding Incentive Options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
9.2 AUTOMATIC TERMINATION. Unless sooner terminated by the
Board, this Plan shall terminate ten (10) years from the earlier of (i)
the date on which this Plan is adopted by the Board or (ii) the date on
which this Plan is approved by the shareholders of the Company. No
Option may be granted after such termination or during any suspension
of this Plan. The amendment or termination of this Plan shall not,
without the consent of the option holder, alter or impair any rights or
obligations under any option previously granted under this Plan.
10. EFFECTIVENESS OF THIS PLAN. This Plan shall become effective upon
adoption by the Board so long as it is approved by the Company's shareholders
any time within twelve (12) months before or after the adoption of this Plan.
Page 13 of 13 - STOCK OPTION PLAN
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-8 pertaining to the
Mackie Designs Inc. 1995 Stock option Plan and to the incorporation by
reference therein of our reports dated February 2, 1996, with respect to the
financial statements and schedule of Mackie Designs Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31,
1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
October 9, 1996
