<PAGE>
As filed with the Securities Exchange Commission on June 18, 1999
Registration No. 333-____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
AMBASSADORS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 91-1688605
- ------------------------------- ------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Dwight D. Eisenhower Building
110 S. Ferrall Street
Spokane, WA 99202
(509) 534-6200
--------------------------------------------
(Address, Including Zip Code, and
Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
AMENDED AND RESTATED 1995 EQUITY PARTICIPATION PLAN
(Full Title of the Plan)
John A. Ueberroth
Chief Executive Officer and President
Dwight D. Eisenhower Building
110 S. Ferrall Street
Spokane, WA 99202
---------------------------------------------
(Name, Address, Including Zip Code and
Telephone Number, Including Area Code,
of Agent for Service)
Copies to:
Gerald M. Chizever, Esq.
Lance Jon Kimmel, Esq.
Richman, Lawrence, Mann, Chizever & Phillips
9601 Wilshire Boulevard - Penthouse
Beverly Hills, California 90210
(310) 274-8300
(310) 274-2831 (fax)
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CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
Proposed
Maximum Proposed Maximum
Title of Offering Aggregate Amount of
Securities to be Amount to be Price per Offering Registration
Registered Registered (1) Share (2) Price(2) Fee (3)
- ---------------- -------------- --------- ---------------- ------------
<S> <C> <C> <C> <C>
Common Stock 262 shares $13.375 $ 3,504.25 $ 0.97
24,800 shares $14.438 $ 358,062.40 $ 99.54
774,938 shares $14.25 $11,042,866.50 $3,069.92
-------------- -------------- ---------
800,000 shares $11,404,433.15 $3,170.43
</TABLE>
(1) Plus such indeterminate number of additional shares of Common Stock as may
be required in the event of a stock dividend, reverse stock split or
combination of shares, recapitalization or other change in the Company's
capital stock.
(2) Estimated solely to determine the registration fee. Based on the option
exercise price for stock options already granted under the Plan and on the
average of the high and low sales prices per share of Common Stock of the
Company with respect to shares of Common Stock remaining to be granted
under the Plan.
(3) Calculated pursuant to Rule 457(a) and Rule 457(c), based upon the average
of the high and low prices of the Common Stock on the Nasdaq National
Market on June 14 1999 which was $14.25.
EXPLANATORY NOTE
----------------
The documents containing the information specified in Part I of this Form S-8
Registration Statement will be sent or given to participants in the Company's
1995 Equity Participation Plan as specified by Rule 428(b)(1). Such documents,
and the documents incorporated by reference in this Registration Statement
pursuant to Item 3 of Part II of this Form S-8, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
<PAGE>
INTRODUCTION
This Registration Statement on Form S-8 is filed by Ambassadors
International, Inc., a Delaware corporation (the "Company" or the "Registrant"),
relating to 800,000 shares of its Common Stock, par value $.01 per share (the
"Common Stock"), issuable to eligible employees of the Company and its
subsidiaries under the Ambassadors International, Inc. Amended and Restated 1995
Equity Participation Plan (the "Plan").
PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
----------------
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
Item 2. Registrant Information and Employee Plan Annual Information.
-----------------------------------------------------------
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
1
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
----------------------------------------
The following documents, which previously have been filed by the Company
with the Securities and Exchange Commission (the "Commission"), are incorporated
herein by reference and made a part hereof:
(i) The Company's latest Annual Report on Form 10-K for the fiscal year
ended December 31, 1998;
(ii) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since the end of
the fiscal year covered by the Annual Report referred to in (i) above;
and
(iii) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A under Section 12 of the
Exchange Act, filed with the Commission on July 12, 1995, including
any amendment or report filed for the purpose of updating such
description.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
hereto, which indicates that all securities offered hereunder have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents.
For purposes of this Registration Statement, any document or any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded to the extent that a
subsequently filed document or a statement contained therein or in any other
subsequently filed document which also is or is deemed to be incorporated herein
by reference modifies or supersedes such document or such statement in such
document. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
2
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Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by the Delaware General Corporation Law ("Delaware Law"), a
Director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a Director. Under current
Delaware Law, liability of a director may not be limited (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, and (iv) for any transaction from which the
director derives an improper personal benefit. The effect of the provision of
the Company's Certificate of Incorporation is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (i) through (iv) above. This provision does not limit or eliminate the
rights of the Company or any stockholder to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
In addition, the Company's Certificate of Incorporation provides that the
Company shall indemnify its directors, officers, employees and agents against
losses incurred by any such person by reason of the fact that such person was
acting in such capacity.
In addition, the Company has entered into agreements (the "Indemnification
Agreements") with each of the directors and officers of the Company pursuant to
which the Company has agreed to indemnify such director or officer from claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or officer and arising out of his capacity
as a director, officer, employee and/or agent of the corporation of which he is
a director or officer to the maximum extent provided by applicable law. In
addition, such director or officer is entitled to an advance of expenses to the
3
<PAGE>
maximum extent authorized or permitted by law to meet the obligations
indemnified against. The Indemnification Agreements also obligate the Company
to purchase and maintain insurance for the benefit and on behalf of its
directors and officers insuring against all liabilities that may be incurred by
such director or officer in or arising out of his capacity as a director,
officer, employee and/or agent of the Company.
To the extent that the Board of Directors or the stockholders of the
Company may in the future wish to limit or repeal the ability of the Company to
indemnify directors, such repeal or limitation may not be effective as to
directors and officers who are currently parties to the Indemnification
Agreements, because their rights to full protection are contractually assured by
the Indemnification Agreements. It is anticipated that similar contracts may be
entered into, from time to time, with future directors of the Company.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not Applicable.
Item 8. Exhibits.
--------
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Commission, each of the following
exhibits is filed herewith:
Exhibit
Number Exhibit Description
- ------ -------------------
4.1 Ambassadors International, Inc. Amended and Restated 1995 Equity
Participation Plan
5.1 Legal Opinion of Richman, Lawrence, Mann, Chizever & Phillips.
23.1 Consent of Richman, Lawrence, Mann, Chizever & Phillips
(contained in Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP (independent auditors).
24 Power of Attorney (contained on signature page hereto).
4
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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:
(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.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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 (a)(1)(i) and (a)(1)(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.
(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.
5
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(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 Securities 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.
(c) 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.
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 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 Spokane, Washington, on June 14, 1999.
AMBASSADORS INTERNATIONAL, INC.
By: /s/ John A. Ueberroth
-------------------------
John A. Ueberroth
President and Chief
Executive Officer
6
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POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Messrs. John A.
Ueberroth and Jeffrey D. Thomas, and each of them, as his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign any and all amendments or post-effective amendments to
this Registration Statement, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each of such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that each of such attorneys-in-fact and agents or his substitutes may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 14th day of June, 1999.
Signature Title
/s/ John A. Ueberroth President and Chief Executive
- -------------------------- Officer (Principal Executive Officer)
John A. Ueberroth
/s/ Peter V. Ueberroth Chairman of the Board of Directors
- --------------------------
Peter V. Ueberroth
/s/ Jeffrey D. Thomas Chief Financial Officer
- -------------------------- (Principal Financial and Accounting Officer)
Jeffrey D. Thomas
/s/ James L. Easton Director
- --------------------------
James L. Easton
/s/ Rafer L. Johnson Director
- --------------------------
Rafer L. Johnson
/s/ John C. Spence Director
- --------------------------
John C. Spence
/s/ Richard D.C. Whilden Director
- --------------------------
Richard D.C. Whilden
7
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EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------ -------------------
4.1 Ambassadors International, Inc. Amended and Restated 1995 Equity
Participation Plan
5.1 Legal opinion of Richman, Lawrence, Mann, Chizever, & Phillips
23.1 Consent of Richman, Lawrence, Mann, Chizever & Phillips (contained in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP (independent auditors).
24 Power of Attorney (contained on signature page hereto).
8
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EXHIBIT 4.1
-----------
THE AMENDED AND RESTATED
1995 EQUITY PARTICIPATION PLAN
OF
AMBASSADORS INTERNATIONAL, INC.
Ambassadors International, Inc., a Delaware corporation, has adopted The
Amended and Restated 1995 Equity Participation Plan of Ambassadors
International, Inc. (the "Plan"), effective May 15, 1998, as further amended
effective May 14, 1998, for the benefit of its eligible employees, consultants
and directors. The Plan consists of two plans, one for the benefit of key
Employees (as such term is defined below) and consultants and one for the
benefit of Independent Directors (as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors, key Employees and
consultants to further the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of directors,
key Employees and consultants considered essential to the long range success
of the Company by offering them an opportunity to own stock in the Company
and/or rights which will reflect the growth, development and financial success
of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 Award Limit. "Award Limit" shall mean 100,000 shares of Common Stock.
1.3 Board. "Board" shall mean the Board of Directors of the Company.
1.4 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5 Committee. "Committee" shall mean the Compensation Committee of the
Board, or a subcommittee of the Board, appointed as provided in Section 9.1.
1.6 Common Stock. "Common Stock" shall mean the common stock of the Company,
par value $0.01 per share, and any equity security of the Company issued or
authorized to be issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
1
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1.7 Company. "Company" shall mean Ambassadors International, Inc., a Delaware
corporation.
1.8 Deferred Stock. "Deferred Stock" shall mean Common Stock awarded under
Article VII of this Plan.
1.9 Director. "Director" shall mean a member of the Board.
1.10 Dividend Equivalent. "Dividend Equivalent" shall mean a right to receive
the equivalent value (in cash or Common Stock) of dividends paid on Common Stock
awarded under Article VII of this Plan.
1.11 Employee. "Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.
1.12 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share of Common Stock as of
a given date shall be (i) the mean between the highest and lowest selling price
of a share of Common Stock on the principal exchange on which shares of Common
Stock are then trading, if any, on such date, or if shares were not traded on
such date, then on the closest preceding date on which a trade occurred, or (ii)
if Common Stock is not traded on an exchange, the mean between the closing
representative bid and asked prices for the Common Stock on such date as
reported by NASDAQ or, if NASDAQ is not then in existence, by its successor
quotation system; or (iii) if Common Stock is not publicly traded, the Fair
Market Value of a share of Common Stock as established by the Committee (or the
Board, in the case of Options granted to Independent Directors) acting in good
faith.
1.14 Grantee. "Grantee" shall mean an Employee or consultant granted a
Performance Award, Dividend Equivalent, Stock Payment or Stock Appreciation
Right, or an award of Deferred Stock, under this Plan.
1.15 Incentive Stock Option. "Incentive Stock Option" shall mean an option
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Committee.
1.16 Independent Director. "Independent Director" shall mean a member of the
Board who is not an Employee of the Company.
1.17 Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean an
Option which is not designated as an Incentive Stock Option by the Committee.
1.18 Option. "Option" shall mean a stock option granted under Article III of
this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock
2
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Option or an Incentive Stock Option; provided, however, that Options granted to
Independent Directors and consultants shall be Non-Qualified Stock Options.
1.19 Optionee. "Optionee" shall mean an Employee, consultant or Independent
Director granted an Option under this Plan.
1.20 Performance Award. "Performance Award" shall mean a cash bonus, stock
bonus or other performance or incentive award that is paid in cash, Common Stock
or a combination of both, awarded under Article VII of this Plan.
1.21 Plan. "Plan" shall mean The Amended and Restated 1995 Equity
Participation Plan of Ambassadors International, Inc.
1.22 Restricted Stock. "Restricted Stock" shall mean Common Stock awarded
under Article VI of this Plan.
1.23 Restricted Stockholder. "Restricted Stockholder" shall mean an Employee
or consultant granted an award of Restricted Stock under Article VI of this
Plan.
1.24 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
1.25 Stock Appreciation Right. "Stock Appreciation Right" shall mean a stock
appreciation right granted under Article VIII of this Plan.
1.26 Stock Payment. "Stock Payment" shall mean (i) a payment in the form of
shares of Common Stock, or (ii) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
or consultant in cash, awarded under Article VII of this Plan.
1.27 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
1.28 Termination of Consultancy. "Termination of Consultancy" shall mean the
time when the engagement of Optionee, Grantee or Restricted Stockholder as a
Consultant to the Company or a Subsidiary is terminated for any reason, with or
without cause, including without limitation, resignation, discharge, death or
retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary. The Committee, in
its absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Consultancy, including, but not by way of limitation,
the question of whether a Termination of Consultancy resulted from a discharge
for good cause, and all questions of whether particular leaves of absence
constitute Terminations of Employment. Notwithstanding any other provision of
this
3
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Plan, the Company or any Subsidiary has an absolute and unrestricted right to
terminate a consultant's service at any time for any reason whatsoever, with or
without cause, except to the extent expressly provided otherwise in writing.
1.29 Termination of Directorship. "Termination of Directorship" shall mean
the time when an Optionee who is an Independent Director ceases to be a Director
for any reason, including, but not by way of limitation, a termination by
resignation, failure to be elected, death or retirement. The Board, in its sole
and absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship.
1.30 Termination of Employment. "Termination of Employment" shall mean the
time when the employee-employer relationship between the Optionee, Grantee or
Restricted Stockholder and the Company or any Subsidiary is terminated for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment, continuing employment of an Optionee,
Grantee or Restricted Stockholder by the Company or any Subsidiary, (ii) at the
discretion of the Committee, terminations which result in a temporary severance
of the employee-employer relationship, and (iii) at the discretion of the
Committee, terminations which are followed by the simultaneous establishment of
a consulting relationship by the Company or a Subsidiary with the former
employee. The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that, with respect to Incentive Stock Options, a leave of
absence, change in status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that such leave of absence, change in status or
other change interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
(a) The shares of stock subject to Options, awards of Restricted Stock,
Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be Common Stock, initially shares of
the Company's Common Stock, par value $0.01 per share. The aggregate number of
such shares which may be issued upon exercise of such options or rights or upon
any such awards under the Plan shall not exceed One Million Four Hundred
Thousand (1,400,000). The shares of Common Stock issuable upon exercise of such
options or rights or upon any such awards may be either previously authorized
but unissued shares or treasury shares.
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(b) The maximum number of shares which may be subject to Options or Stock
Appreciation Rights granted under the Plan to any individual in any calendar
year shall not exceed the Award Limit. To the extent required by Section 162(m)
of the Code, shares subject to Options which are cancelled continue to be
counted against the Award Limit and if, after grant of an Option, the price of
shares subject to such Option is reduced, the transaction is treated as a
cancellation of the Option and a grant of a new Option and both the Option
deemed to be canceled and the Option deemed to be granted are counted against
the Award Limit. Furthermore, to the extent required by Section 162(m) of the
Code, if, after grant of a Stock Appreciation Right, the base amount on which
stock appreciation is calculated is reduced to reflect a reduction in the Fair
Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be canceled
and the Stock Appreciation Right deemed to be granted are counted against the
Award Limit.
2.2 Unexercised Options and Other Rights. If any Option, or other right to
acquire shares of Common Stock under any other award under this Plan, expires or
is cancelled without having been fully exercised, the number of shares subject
to such Option or other right but as to which such Option or other right was not
exercised prior to its expiration or cancellation may again be optioned, granted
or awarded hereunder, subject to the limitations of Section 2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Subject to the Award Limit, any Employee or consultant
selected by the Committee pursuant to Section 3.4(a)(i) shall be eligible to be
granted an Option. Each Independent Director of the Company shall be eligible to
be granted Options at the times and in the manner set forth in Section 3.4(d).
3.2 Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under this Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No Incentive Stock Option shall
be granted unless such Option, when granted, qualifies as an "incentive stock
option" under Section 422 of the Code. No Incentive Stock Option shall be
granted to any person who is not an Employee.
3.4 Granting of Options.
(a) The Committee shall from time to time, in its absolute discretion, and
subject to the applicable limitations of this Plan:
(i) Determine which Employees are key Employees and select from among the
key Employees or consultants (including Employees or consultants who have
previously received
5
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Options or other awards under this Plan) such of them as in its opinion
should be granted Options;
(ii) Subject to the Award Limit, determine the number of shares to be
subject to such Options granted to the selected key Employees or consultants;
(iii) Determine whether such Options are to be Incentive Stock Options or
Non-Qualified Stock Options and whether such Options are to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code; and
(iv) Determine the terms and conditions of such Options, consistent with
this Plan; provided, however, that the terms and conditions of Options
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall include, but not be limited to, such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code.
(b) Upon the selection of a key Employee or consultant to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee or consultant
that the Employee or consultant surrender for cancellation some or all of the
unexercised Options, awards of Restricted Stock or Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments or
other rights which have been previously granted to him under this Plan or
otherwise. An Option, the grant of which is conditioned upon such surrender,
may have an option price lower (or higher) than the exercise price of such
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
(c) Any Incentive Stock Option granted under this Plan may be modified by
the Committee to disqualify such option from treatment as an "incentive stock
option" under Section 422 of the Code.
(d) Each person who is an Independent Director as of the date of the initial
public offering of Common Stock automatically shall be granted an option to
purchase ten thousand (10,000) shares of Common Stock (subject to adjustment
as provided in Section 10.3) on the date of such initial public offering. When
a person is initially elected to the Board following the date of the initial
public offering of Common Stock and is then an Independent Director, each such
new Independent Director automatically shall be granted an Option to purchase
ten thousand (10,000) shares of Common Stock (subject to adjustment as
provided in Section 10.3) on the date of his or her election to the Board.
Members of the Board who are Employees who subsequently retire from the
Company and remain on the Board will not receive an Option grant pursuant to
this
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Section 3.4(d). All the foregoing Option grants authorized by this Section
3.4(d) are subject to stockholder approval of the Plan.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a written Stock
Option Agreement, which shall be executed by the Optionee and an authorized
officer of the Company and which shall contain such terms and conditions as the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall determine, consistent with this Plan. Stock Option Agreements
evidencing Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Stock Option Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
4.2 Option Price. The price per share of the shares subject to each Option
shall be set by the Committee; provided, however, that such price shall be no
less than the par value of a share of Common Stock, and in the case of Options
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code, as well as Options granted to Independent Directors,
such price shall be no less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted and in the case of Incentive
Stock Options such price shall not be less than the greater of: (i) 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted,
or (ii) 110% of the Fair Market Value of a share of Common Stock on the date
such Option is granted in the case of an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary.
4.3 Option Term. The term of an Option (other than an Option granted to an
Independent Director) shall be set by the Committee in its discretion; provided,
however, that, in the case of Incentive Stock Options, the term shall not be
more than ten (10) years from the date the Incentive Stock Option is granted, or
five (5) years from such date if the Incentive Stock Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary.
4.4 Option Vesting.
(a) The period during which the right to exercise an Option in whole or in
part vests in the Optionee shall be set by the Committee and the Committee may
determine that an Option may not be exercised in whole or in part for a
specified period after it is granted; provided, however, that no Option granted
to a person subject to Section 16 of the Exchange Act shall be exercisable until
at least six months have elapsed from (but excluding) the date on which the
Option was granted. At any time after grant of an Option, the Committee (or the
Board) may, in its sole discretion and subject to whatever terms and conditions
it selects, accelerate the period during which an Option vests. Notwithstanding
the foregoing, all Options granted to Independent Directors shall become
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exercisable in cumulative annual installments of 25% on each of the first,
second, third and fourth anniversaries of the date of Option grant, and the term
of each such Option shall be ten years without variation or acceleration
hereunder, except as provided in Section 10.4 and except that any Option granted
to an Independent Director shall become immediately exercisable in full upon the
retirement of the Independent Director in accordance with the Company's
retirement policy applicable to Directors.
(b) No portion of an Option which is unexercisable at Termination of
Employment, Termination of Directorship or Termination of a Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee with respect to Options granted to Employees or
consultants, either in the Stock Option Agreement or in a resolution adopted
following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock with respect
to which "incentive stock options" (within the meaning of Section 422 of the
Code, but without regard to Section 422(d) of the Code) are exercisable for the
first time by an Optionee during any calendar year (under the Plan and all other
incentive stock option plans of the Company and any Subsidiary) exceeds
$100,000, such Options shall be treated as Non-Qualified Options to the extent
required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the Fair Market Value of
stock shall be determined as of the time the Option with respect to such stock
is granted.
4.5 Consideration. In consideration of the granting of an Option, the
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company or any Subsidiary for a period of at least one year
after the Option is granted (or until the next annual meeting of stockholders of
the Company, in the case of an Independent Director). Nothing in this Plan or in
any Stock Option Agreement hereunder shall confer upon any Optionee any right to
continue in the employ of, or as a consultant for, the Company or any
Subsidiary, or as a director of the Company, or shall interfere with or restrict
in any way the rights of the Company and any Subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised in whole or in
part. However, an Option shall not be exercisable with respect to fractional
shares and the Committee (or the Board, in the case of Options granted to
Independent Directors) may require that, by the terms of the Option, a partial
exercise be with respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:
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(a) A written notice complying with the applicable rules established by the
Committee or the Board stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
(b) Such representations and documents as the Committee or the Board, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;
(c) In the event that the Option shall be exercised pursuant to Section 10.1
by any person or persons other than the Optionee, appropriate proof of the right
of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, at the
discretion of the Committee (or the Board, in the case of Options granted to
Independent Directors), the terms of the Option may (i) allow a delay in payment
up to thirty (30) days from the date the Option, or portion thereof, is
exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee, duly endorsed for transfer to the
Company with a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof; (iii) subject to the
timing requirements of Section 5.3, allow payment, in whole or in part, through
the surrender of shares of Common Stock then issuable upon exercise of the
Option having a Fair Market Value on the date of Option exercise equal to the
aggregate exercise price of the Option or exercised portion thereof; (iv) allow
payment, in whole or in part, through the delivery of property of any kind which
constitutes good and valuable consideration; (v) allow payment, in whole or in
part, through the delivery of a full recourse promissory note bearing interest
(at no less than such rate as shall then preclude the imputation of interest
under the Code) and payable upon such terms as may be prescribed by the
Committee or the Board, or (vi) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii), (iii), (iv) and (v).
In the case of a promissory note, the Committee or the Board may also prescribe
the form of such note and the security to be given for such note. The Option may
not be exercised, however, by delivery of a promissory note or by a loan from
the Company when or where such loan or other extension of credit is prohibited
by law.
5.3 Certain Timing Requirements. At the discretion of the Committee (or
Board, in the case of Options granted to Independent Directors), shares of
Common Stock issuable to the Optionee upon exercise of the Option may be used to
satisfy the Option exercise price or the tax withholding consequences of such
exercise, in the case of persons subject to Section 16 of the Exchange Act, only
(i) during the period beginning on the third business day following the date of
release of the quarterly or annual summary statement of sales and earnings of
the Company and ending on the twelfth business day following such date or (ii)
pursuant to an irrevocable written election by the Optionee to use shares of
Common Stock issuable to the Optionee upon exercise of the Option to
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pay all or part of the Option price or the withholding taxes made at least six
months prior to the payment of such Option price or withholding taxes.
5.4 Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The completion of any registration or other qualification of such shares
under any state or federal law, or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its absolute discretion, deem necessary
or advisable;
(c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Committee or Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise of the
Option as the Committee or Board may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options shall not be, nor have any
of the rights or privileges of, stockholders of the Company in respect of any
shares purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
5.6 Ownership and Transfer Restrictions. The Committee (or Board, in the case
of Options granted to Independent Directors), in its absolute discretion, may
impose such restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
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ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock.
(a) The Committee shall from time to time, in its absolute discretion:
(i) Select from among the key Employees or consultants (including Employees
or consultants who have previously received other awards under this Plan) such
of them as in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms and conditions
applicable to such Restricted Stock, consistent with this Plan.
(b) The Committee shall establish the purchase price, if any, and form of
payment for Restricted Stock; provided, however, that such purchase price shall
be no less than the par value of the Common Stock to be purchased. In all cases,
legal consideration shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee or consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
6.2 Restricted Stock Agreement. Restricted Stock shall be issued only
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected key Employee or consultant and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.
6.3 Consideration. As consideration for the issuance of Restricted Stock, in
addition to payment of any purchase price, the Restricted Stockholder shall
agree, in the written Restricted Stock Agreement, to remain in the employ of, or
to consult for, the Company or any Subsidiary for a period of at least one year
after the Restricted Stock is issued. Nothing in this Plan or in any Restricted
Stock Agreement hereunder shall confer on any Restricted Stockholder any right
to continue in the employ of, or as a consultant for, the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Restricted Stockholder at any time for any reason whatsoever, with or
without good cause.
6.4 Rights as Stockholders. Upon delivery of the shares of Restricted Stock
to the escrow holder pursuant to Section 6.7, the Restricted Stockholder shall
have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided,
however,that in the discretion of the Committee, any extraordinary distributions
with respect to the Common Stock shall be subject to the restrictions set forth
in Section 6.5.
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6.5 Restriction. All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that no share of Restricted Stock granted to a person subject to Section 16 of
the Exchange Act shall be sold, assigned or otherwise transferred until at least
six months have elapsed from (but excluding) the date on which the Restricted
Stock was issued, and provided, further, that by a resolution adopted after the
Restricted Stock is issued, the Committee may, on such terms and conditions as
it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Restricted Stock Agreement. Restricted Stock may not
be sold or encumbered until all restrictions are terminated or expire. Unless
provided otherwise by the Committee, if no consideration was paid by the
Restricted Stockholder upon issuance, a Restricted Stockholder's rights in
unvested Restricted Stock shall lapse upon Termination of Employment or, if
applicable, upon the termination of his consulting relationship with the
Company.
6.6 Repurchase of Restricted Stock. The Committee shall provide in the terms
of each individual Restricted Stock Agreement that the Company shall have the
right to repurchase from the Restricted Stockholder the Restricted Stock then
subject to restrictions under the Restricted Stock Agreement immediately upon a
Termination of Employment or, if applicable, upon a termination of any
consulting relationship between the Restricted Stockholder and the Company, at a
cash price per share equal to the price paid by the Restricted Stockholder for
such Restricted Stock; provided, however, that provision may be made that no
such right of repurchase shall exist in the event of a Termination of Employment
or Termination of Consultancy without cause, or following a change in control of
the Company or because of the Restricted Stockholder's retirement, death or
disability, or otherwise.
6.7 Escrow. The Secretary of the Company or such other escrow holder as the
Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
6.8 Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
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ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any key Employee or consultant selected by the
Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee, or may
be based upon the appreciation in the market value, book value, net profits or
other measure of the value of a specified number of shares of Common Stock over
a fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
consultant.
7.2 Dividend Equivalents. Any key Employee or consultant selected by the
Committee may be granted Dividend Equivalents based on the dividends declared on
Common Stock, to be credited as of dividend payment dates, during the period
between the date an Option, Stock Appreciation Right, Deferred Stock or
Performance Award is granted, and the date such Option, Stock Appreciation
Right, Deferred Stock or Performance Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.
7.3 Stock Payments. Any key Employee or consultant selected by the Committee
may receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Fair Market Value, book value, net profits or other measure of
the value of Common Stock or other specific performance criteria determined
appropriate by the Committee on the date such Stock Payment is made or on any
date thereafter.
7.4 Deferred Stock. Any key Employee or consultant selected by the Committee
may be granted an award of Deferred Stock in the manner determined from time to
time by the Committee. The number of shares of Deferred Stock shall be
determined by the Committee and may be linked to the market value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.
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7.5 Performance Award Agreement, Dividend Equivalent Agreement, Deferred
Stock Agreement, Stock Payment Agreement. Each Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be evidenced by a
written agreement, which shall be executed by the Grantee and an authorized
Officer of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan.
7.6 Term. The term of a Performance Award, Dividend Equivalent award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.
7.7 Exercise Upon Termination of Employment. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable only
while the Grantee is an Employee or consultant; provided that the Committee may
determine that the Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment may be exercised subsequent to Termination of
Employment or Termination of Consultancy without cause, or following a change in
control of the Company, or because of the Grantee's retirement, death or
disability, or otherwise.
7.8 Payment on Exercise. Payment of the amount determined under Section 7.1
or 7.2 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.4.
7.9 Consideration. In consideration of the granting of a Performance Award,
Dividend Equivalent award of Deferred Stock and/or Stock Payment, the Grantee
shall agree, in a written agreement, to remain in the employ of, or to consult
for, the Company or any Subsidiary for a period of at least one year after such
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment is granted. Nothing in this Plan or in any agreement hereunder shall
confer on any Grantee any right to continue in the employ of, or as a consultant
for, the Company or any Subsidiary or shall interfere with or restrict in any
way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any reason whatsoever, with
or without good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. Subject to the Award Limit, a Stock
Appreciation Right may be granted to any key Employee or consultant selected by
the Committee. A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with this Plan as
the Committee shall impose, and shall be evidenced by a written Stock
Appreciation Right Agreement, which shall be executed by the Grantee and an
authorized officer of the Company. The Committee, in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock
Appreciation Right Agreements evidencing Stock Appreciation Rights intended to
so qualify shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code. Without
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limiting the generality of the foregoing, the Committee may, in its discretion
and on such terms as it deems appropriate, require as a condition of the grant
of a Stock Appreciation Right to an Employee or consultant that the Employee or
consultant surrender for cancellation some or all of the unexercised Options,
awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or other rights
which have been previously granted to him under this Plan or otherwise. A Stock
Appreciation Right, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
8.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than the number of shares
subject to the simultaneously or previously granted Option to which it is
coupled.
(c) A CSAR shall entitle the Grantee (or other person entitled to exercise the
Option pursuant to this Plan) to surrender to the Company unexercised a portion
of the Option to which the CSAR relates (to the extent then exercisable pursuant
to its terms) and to receive from the Company in exchange therefor an amount
determined by multiplying the difference obtained by subtracting the Option
exercise price from the Fair Market Value of a share of Common Stock on the date
of exercise of the CSAR by the number of shares of Common Stock with respect to
which the CSAR shall have been exercised, subject to any limitations the
Committee may impose.
8.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be unrelated to any
Option and shall have a term set by the Committee. An ISAR shall be exercisable
in such installments as the Committee may determine. An ISAR shall cover such
number of shares of Common Stock as the Committee may determine; provided,
however, that no ISAR granted to a person subject to Section 16 of the Exchange
Act shall be exercisable until at least six months have elapsed from (but
excluding) the date on which the Option was granted. The exercise price per
share of Common Stock subject to each ISAR shall be set by the Committee. An
ISAR is exercisable only while the Grantee is an Employee or consultant;
provided that the Committee may determine that the ISAR may be exercised
subsequent to Termination of Employment or Termination of Consultancy without
cause, or following a change in control of the Company, or because of the
Grantee's retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Grantee (or other person entitled to exercise
the ISAR pursuant to this Plan) to exercise all or a specified portion of the
ISAR (to the extent then exercisable pursuant
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to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price per share
of the ISAR from the Fair Market Value of a share of Common Stock on the date of
exercise of the ISAR by the number of shares of Common Stock with respect to
which the ISAR shall have been exercised, subject to any limitations the
Committee may impose.
8.4 Payment and Limitations on Exercise.
(a) Payment of the amount determined under Section 8.2(c) and 8.3(b) above
shall be in cash, in Common Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.4
hereinabove pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are subject to Section 16 of the
Exchange Act may, in the discretion of the Board or Committee, be required to
comply with any timing or other restrictions under Rule 16b-3 applicable to the
settlement or exercise of a Stock Appreciation Right.
8.5 Consideration. In consideration of the granting of a Stock Appreciation
Right, the Grantee shall agree, in the written Stock Appreciation Right
Agreement, to remain in the employ of, or to consult for, the Company or any
Subsidiary for a period of at least one year after the Stock Appreciation Right
is granted. Nothing in this Plan or in any Stock Appreciation Right Agreement
hereunder shall confer on any Grantee any right to continue in the employ of, or
as a consultant for, the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.
ARTICLE IX
ADMINISTRATION
9.1 Compensation Committee. The Compensation Committee (or a subcommittee of
the Board assuming the functions of the Committee under this Plan) shall consist
of two or more Independent Directors appointed by and holding office at the
pleasure of the Board, each of whom is both a "disinterested person" as defined
by Rule 16b-3 and an "outside director" for purposes of Section 162(m) of the
Code. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the duty of the Committee to
conduct the general administration of this Plan in accordance with its
provisions. The Committee shall have the power to interpret this Plan and the
agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
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conduct the general administration of the Plan with respect to Options granted
to Independent Directors. Any such grant or award under this Plan need not be
the same with respect to each Optionee, Grantee or Restricted Stockholder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee.
9.3 Majority Rule. The Committee shall act by a majority of its members in
attendance at a meeting at which a quorum is present or by a memorandum or other
written instrument signed by all members of the Committee.
9.4 Compensation: Professional Assistance; Good Faith Actions. Members of the
Committee shall receive such compensation for their services as members as may
be determined by the Board. All expenses and liabilities which members of the
Committee incur in connection with the administration of this Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company's officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees. Grantees,
Restricted Stockholders, the Company and all other interested persons. No
members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution, unless and until such rights or awards have been exercised, or the
shares underlying such rights or awards have been issued, and all restrictions
applicable to such shares have lapsed. No Option, Restricted Stock award,
Deferred Stock award, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment or interest or right therein shall be liable for the
debts, contracts or engagements of the Optionee, Grantee or Restricted
Stockholder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
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During the lifetime of the Optionee or Grantee, only he may exercise an Option
or other right or award (or any portion thereof) granted to him under the Plan.
After the death of the Optionee or Grantee, any exercisable portion of an Option
or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.
10.2 Amendment, Suspension or Termination of this Plan. This Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Committee, no action of the Committee may, except as provided in Section
10.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under this Plan or modify the Award Limit, and no action of
the Committee may be taken that would otherwise require stockholder approval as
a matter of applicable law, regulation or rule. Notwithstanding the foregoing,
the provisions of this Plan relating to formula Option grants to Independent
Directors, including the amount, price and timing thereof, shall not be amended
more than once in any six-month period other than to comport with changes, in
the Code, the Employee Retirement Income Security Act, or the respective rules
thereunder. No amendment, suspension or termination of this Plan shall, without
the consent of the holder of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, alter or impair any rights or obligations under any Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments theretofore granted
or awarded, unless the award itself otherwise expressly so provides. No Options,
Restricted Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted or awarded during any
period of suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:
(a) The expiration of ten years from the date the Plan is adopted by the
Board; or
(b) The expiration of ten years from the date the Plan is approved by the
Company's stockholders under Section 10.5.
10.3 Changes in Common Stock or Assets of the Company. In the event that the
outstanding shares of Common Stock are hereafter changed into or exchanged for
cash or a different number or kind of shares or other securities of the Company,
or of another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock splitup, stock dividend, or
combination of shares, appropriate adjustments shall be made by the Committee in
the number and kind of shares for which Options, Restricted Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents, Deferred
Stock awards or Stock Payments may be granted, including adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares which may be
issued and of the Award limit described in Section 1.2, and appropriate
adjustments shall be made by the Board in the number and kind of shares for the
purchase of which Options are granted to Independent Directors under Section
3.4(d).
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In the event of such a change or exchange, subject to the other provisions of
this Plan, the Committee (or the Board, in the case of Options granted to
Independent Directors) shall also make an appropriate and equitable adjustment
in the number and kind of shares as to which all outstanding Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, or portions thereof then unexercised, shall be exercisable and in the
number and kind of shares of outstanding Restricted Stock or Deferred Stock.
Such adjustment shall be made with the intent that after the change or exchange
of shares, each Optionee's and each Grantee's and each Restricted Stockholder's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in an outstanding Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment may include a necessary
or appropriate corresponding adjustment in Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment exercise price, but
shall be made without change in the total price applicable to the Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment, or the unexercised portion thereof (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices).
Where an adjustment of the type described above is made to an Incentive Stock
Option under this Section, the adjustment will be made in a manner which will
not be considered a "modification" under the provisions of subsection 424(h)(3)
of the Code.
Notwithstanding the foregoing, in the event of such a reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock dividend
or combination, or other adjustment or event which results in shares of Common
Stock being exchanged for or converted into cash, securities or other property,
the Company will have the right to terminate this Plan as of the date of the
exchange or conversion, in which case all options, rights and other awards under
this Plan shall become the right to receive such cash, securities or other
property, net of any applicable exercise price.
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
the Company's Common Stock, the Committee (or the Board, in the case of Options
granted to Independent Directors) may in its discretion make an appropriate and
equitable adjustment to the Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment exercise price to reflect such diminution.
10.4 Merger of the Company. In the event of the merger or consolidation of
the Company with or into another corporation, the exchange of all or
substantially all of the assets of the Company for the securities of another
corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution of the Company:
(a) At the discretion of the Committee (or the Board, in the case of Options
granted to Independent Directors), the terms of an Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment may provide that
it cannot be exercised after such event.
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(b) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that,
for a specified period of time prior to such event, such Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in this Plan or in the provisions of such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment.
(c) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that
upon such event, such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment shall be assumed by the successor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices.
(d) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide either by the terms of a Restricted Stock
award or Deferred Stock award or by a resolution adopted prior to the occurrence
of such event that, for a specified period of time prior to such event, the
restrictions imposed under a Restricted Stock Agreement or a Deferred Stock
Agreement upon some or all shares of Restricted Stock or Deferred Stock may be
terminated, and, in the case of Restricted Stock, some or all shares of such
Restricted Stock may cease to be subject to repurchase under Section 6.6 after
such event.
(e) None of the foregoing discretionary terms of this Section 10.4 shall be
permitted with respect to Options granted under Section 3.4(d) to Independent
Directors to the extent that such discretion would be inconsistent with the
requirements of Rule 16b-3.
10.5 Approval of Plan by Stockholders. This Plan will be submitted for the
approval of the Company's stockholders within twelve months after the date of
the Board's initial adoption of this Plan, Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments may be granted and
Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void.
10.6 Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Optionee, Grantee or
Restricted Stockholder of any sums required by federal, state or local tax law
to be withheld with respect to the issuance, vesting or
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exercise of any Option, estricted Stock, Deferred Stock, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment. Subject to the
timing requirements of Section 5.3, the Committee (or the Board, in the case of
Options granted to Independent Directors) may in its discretion and in
satisfaction of the foregoing requirement allow such Optionee, Grantee or
Restricted Stockholder to elect to have the Company withhold shares of Common
Stock (or allow the return of shares of Common Stock) having a Fair Market Value
equal to the sums required to be withheld.
10.7 Loans. The Committee may, in its discretion, extend one or more loans to
key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted under this Plan, or the issuance of Restricted Stock or Deferred
Stock awarded under this Plan. The terms and conditions of any such loan shall
be set by the Committee.
10.8 Limitations Applicable to Section 16 Persons and Performance-Based
Compensation. Notwithstanding any other provision of this Plan, any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted, or Restricted Stock or Deferred Stock awarded, to a key
Employee or Director who is then subject to Section 16 of the Exchange Act shall
be subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3
of the Exchange Act) that are requirements for the application of such exemptive
rule, and this Plan shall be deemed amended to the extent necessary to conform
to such limitations. Furthermore, notwithstanding any other provision of this
Plan, any Option or Stock Appreciation Right intended to qualify as performance-
based compensation as described in Section 162(m)(4)(C) of the Code shall be
subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and this Plan shall be deemed amended to the extent necessary to conform to such
requirements.
10.9 Effect of Plan Upon Options and Compensation Plans. The adoption of this
Plan shall not affect any other compensation or incentive plans in effect for
the Company or any Subsidiary. Nothing in this Plan shall be construed to limit
the right of the Company (i) to establish any other forms of incentives or
compensation for Employees, Directors or consultants of the Company or any
Subsidiary or (ii) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate purpose including, but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
10.10 Compliance with Laws. This Plan, the granting and vesting of Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments under this Plan and
the issuance and delivery of shares of Common Stock and the payment of money
under this Plan or under Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments granted or Restricted Stock or Deferred
Stock awarded hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal
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margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan, Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
10.11 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Plan.
10.12 Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
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EXHIBIT 5.1
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[LETTERHEAD OF RICHMAN LAWRENCE MANN CHIZEVER & PHILLIPS]
June 18, 1999
Ambassadors International, Inc.
110 S. Ferrall Street
Spokane, Washington 99202
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
We have acted as securities counsel to Ambassadors International, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"), of a Registration Statement on Form S-8
(the "Registration Statement"). The Registration Statement relates to the
public offering by the Company of up to 800,000 shares of Common Stock of the
Company (the "Shares") pursuant to the Company's Amended and Restated 1995
Equity Participation Plan.
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records and other instruments as we have deemed
necessary or appropriate as a basis for the opinions set forth herein, including
(i) the Registration Statement of the Company filed with the Securities and
Exchange Commission; (ii) the Articles of Incorporation and the Bylaws of the
Company; (iii) the form of Common Stock Certificate; (iv) copies of certain
resolutions adopted by the Board of Directors of the Company relating to the
filing of the Registration Statement and any amendments of supplements thereto
and related matters; and (v) such other documents as we have deemed necessary
or appropriate as a basis for the opinions set forth below.
<PAGE>
Ambassadors International, Inc.
June 18, 1999
Page 2
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to
any facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers and other representatives of the Company and others.
Members of our firm are admitted to the bar in the State of California, and
we do not express any opinion as to the laws of any jurisdiction other than the
corporate laws of the State of California and the laws of the United States of
America to the extent referred to specifically herein.
Based on the foregoing, it is our opinion that, subject to effectiveness
with the Securities and Exchange Commission of the Registration Statement and to
registration or qualification under the securities laws of the states in which
securities may be sold, the Shares are duly and validly authorized and, when
issued, will constitute legally issued, fully paid and nonassessable shares of
Common Stock of the Company.
We consent to the use of our name in the Registration Statement, and to the
filing of this opinion as an exhibit to the Registration Statement. By giving
you this opinion and consent, we do not admit that we are experts with respect
to any part of the Registration Statement within the meaning of the term
"expert" as used in Section 11 of the Securities Act or the rules and
regulations promulgated thereunder, nor do we admit that we are in the category
of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Richman, Lawrence, Mann, Chizever & Phillips
<PAGE>
EXHIBIT 23.2
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CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement of Ambassadors International, Inc. on Form S-8 of our report, which
includes an explanatory paragraph concerning a change in accounting for
derivative instruments in 1998 and the impairment of long-lived assets in 1996,
dated February 5, 1999, on our audits of the consolidated financial statements
of Ambassadors International, Inc. as of December 31, 1998 and 1997 and for the
three years in the period ended December 31, 1998, which report is included in
this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
Spokane, Washington
June 14, 1999
