-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fe0Ywv2+mFLvWvFsemKG0HcF5G+ytv6eKlQfYTL5vz5yt07QwV2odeE4yf8KI2a5 sKJU6Tfn+PjcVWfobqHnCA== 0000891020-95-000247.txt : 19950613 0000891020-95-000247.hdr.sgml : 19950613 ACCESSION NUMBER: 0000891020-95-000247 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19950612 EFFECTIVENESS DATE: 19950701 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUN SPORTSWEAR INC CENTRAL INDEX KEY: 0000856711 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 911132690 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-60159 FILM NUMBER: 95546455 BUSINESS ADDRESS: STREET 1: 6520 SOUTH 190TH ST CITY: KENT STATE: WA ZIP: 98032 BUSINESS PHONE: 2062513565 S-8 1 SUN SPORTSWEAR FORM S-8 1 As filed with the Securities and Exchange Commission on June 12, 1995 Registration No. 33-____ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SUN SPORTSWEAR, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Washington 91-1132690 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.)
6520 South 190th Street, Kent, Washington 98032 ----------------------------------------------- (Address of principal executive offices) SUN SPORTSWEAR, INC. 1989 EMPLOYEE STOCK OPTION PLAN 1989 DIRECTOR STOCK OPTION PLAN ------------------------------- (Full title of the plans) Larry C. Mounger, President Sun Sportswear, Inc. 6520 South 190th Street Kent, Washington 98032 --------------------------------------- (Name and address of agent for service) (206) 251-3565 ------------------------------------------------------------- (Telephone number, including area code, of agent for service) Copy to: James E. Dunlap Heller, Ehrman, White & McAuliffe 6100 Columbia Center 701 Fifth Avenue Seattle, Washington 98104-7098 (206) 389-6044 CALCULATION OF REGISTRATION FEE
========================================================================================================= Proposed Proposed Title of maximum maximum securities Amount offering aggregate Amount of to be to be price per offering registration registered registered share (1) price (2) fee - --------------------------------------------------------------------------------------------------------- Common Stock, no par value 520,500 $ 6.00 $ 2,188,750 $ 754.54 =========================================================================================================
(1) Based on highest exercise price of outstanding options for shares of Registrant's Common Stock. (2) As to shares of Registrant's Common Stock underlying unissued options, estimated (solely for the purpose of calculating the registration fee) on the basis of the average high and low price of the Registrant's Common Stock on the NASDAQ National Market on June 6, 1995 (as reported in the Wall Street Journal on June 7, 1995). 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents filed or to be filed with the Commission by the registrant are incorporated by reference in this registration statement: (a) The registrant's latest annual report (Form 10-K) filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the latest prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"), which contains, either directly or by incorporation by reference, certified financial statements for the registrant's latest fiscal year for which such statements have been filed; (b) All other reports filed by the registrant pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report or prospectus referred to in (a) above; (c) The description of the Common Stock of the registrant contained in the registration statement filed under the Exchange Act registering such Common Shares under Section 12 of the Exchange Act (File No. 0-18054); and (d) All documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 23B.08.320 of the Washington Corporation Law allows a Company to include in its certificate of incorporation a provision which limits a director's personal liability to the corporation or its shareholders for monetary damages for conduct as a director, with certain exceptions. The Company's Articles of Incorporation includes such provision limiting directors' personal liability in accordance with Section 23B.08.320 of the Washington Corporation Law. Additionally, the Company has the power, pursuant to Section 23B.08.510 and 23B.08.570 of the Washington Corporation Law, to indemnify its directors, officers and other persons for certain acts. Pursuant to its by-laws, the Company will indemnify its officers, directors and other persons described in Section 23B.08.510 of the Washington Corporation Law to the full extent permitted by law. The Company maintains insurance for this purpose. Such insurance generally insures the directors and officers against claims due to any breach of duty, neglect, error, misstatement, misleading statement, omission or other 2 3 act solely by reason of their being directors and officers and for acts, errors and omissions by them in the provision of professional services to the Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company, the Company 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 of 1933 and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person for the Company 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 Company will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. ITEM 8. EXHIBITS 5 Opinion of Heller, Ehrman, White & McAuliffe 24.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part of Exhibit 5) 24.2 Consent of Price Waterhouse LLP, Independent Auditors 25 Power of Attorney (see page 5) 28.1 Sun Sportswear, Inc. 1989 Employee Stock Option Plan 28.2 Sun Sportswear, Inc. 1989 Director Stock Option Plan
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 of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and 3 4 (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 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed 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 of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 4 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Kent, State of Washington, on this 31st day of May, 1995. SUN SPORTSWEAR, INC. By /s/ Larry C. Mounger --------------------------------- Larry C. Mounger Chairman of the Board, President, Chief Executive Officer and Director POWER OF ATTORNEY TO SIGN AMENDMENTS KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Larry C. Mounger and Kevin C. James, and each of them, with full power of substitution and full power to act without the other such person's true and lawful attorney-in-fact and agent for such person in such person's name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as they or such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the dates indicated. /s/ Larry C. Mounger Chairman of the Board, May 31, 1995 ------------------------------------- President, Chief Executive Larry C. Mounger Officer and Director
5 6 /s/ L. Kaye Counts Executive Vice President, May 31, 1995 ------------------------------------- Chief Operating Officer, L. Kaye Counts and Director /s/ James H. Williams Director May 31, 1995 ------------------------------------- James H. Williams /s/ Paul R. Rollins, Jr. Director May 31, 1995 ------------------------------------- Paul R. Rollins, Jr. /s/ James A. Walsh Director May 31, 1995 ------------------------------------- James A. Walsh /s/ Robert A. Pene Director May 31, 1995 ------------------------------------- Robert A. Pene /s/ Kevin C. James Senior Vice President, May 31, 1995 ------------------------------------- Secretary and Kevin C. James Chief Financial Officer
6 7 Index to Exhibits
Sequentially Item No. Description of Item Numbered Page - ------- ------------------- ------------- 5 Opinion of Heller, Ehrman, White & McAuliffe 24.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part of Exhibit 5) 24.2 Consent of Price Waterhouse LLP, Independent Auditors 25 Power of Attorney (see page 5) 28.1 1989 Sun Sportswear, Inc. Employee Stock Option Plan 28.2 1989 Sun Sportswear, Inc. Director Stock Option Plan
7 EX-5 2 EXHIBIT 5: HELLER EHRMAN OPINION 1 June 9, 1995 Sun Sportswear, Inc. 6520 South 190th Street Kent, Washington 98032 Re: Registration Statement on Form S-8 under the Securities Act of 1933, as amended Ladies and Gentlemen: You have requested our opinion with respect to certain matters relating to the Registration Statement on Form S-8 which you will be filing with the Securities and Exchange Commission (the "Registration Statement") in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 520,500 shares of your Common Stock, no par value ("Registered Stock"). Capitalized terms used in this opinion and not otherwise defined in this opinion have the meanings given them in the Registration Statement. The Registered Stock is currently unissued shares. The Registered Stock is to be sold to your employees or issued to members of your Board of Directors upon exercise by them of stock options (the "Options") granted as described in the Registration Statement. In connection with this opinion, we have, with your consent, assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the authenticity and conformity to the originals of all records, documents and instruments submitted to us as copies. We have based our opinion upon our review of the following documents: 1. Your Restated Articles of Incorporation, certified as of April 11, 1995 by the Secretary of State of the State of Washington as being true and correct, and certified to us by your Chairman of the Board as being complete and in full force and effect as of the date of this opinion; 2. Your Bylaws, as amended, certified to us by your Chairman of the Board as being complete and in full force and effect as of the date of this opinion; 2 Sun Sportswear, Inc. June 9, 1995 Page 2 3. Records of proceedings and actions of your Board of Directors and shareholders, certified to us by your President as constituting all records of their proceedings and actions through the date of this opinion relating to the sale of Registered Stock in accordance with the Registration Statement; 4. A specimen stock certificate evidencing the shares of Common Stock; 5. The Registration Statement and exhibits thereto; and 6. Information provided by the Company's transfer agent as to the number of shares of Common Stock outstanding as of June 9, 1995. This opinion is limited to the federal law of the United States of America and the law of the State of Washington. On the basis of and subject to the foregoing, we are of the opinion that the Registered Stock, when and if issued, delivered and paid for as contemplated by the Registration Statement, will be duly authorized, validly issued, fully paid and nonassessable. Our opinion is qualified to the extent that in the event of a stock split, share dividend or other reclassification of the Common Stock effected subsequent to the date hereof, the number of shares of Common Stock issuable upon the exercise of Options may be adjusted automatically such that the number of such shares may exceed the number of remaining authorized, but unissued shares of Common Stock at the time the Options are exercised. We consent to the filing of this opinion as Exhibit 5 to the Registration Statement. We disclaim any obligation to advise you of any developments in areas covered by this opinion that occur after the date of this opinion. Very truly yours, HELLER, EHRMAN, WHITE & McAULIFFE /s/ Heller Ehrman White & McAuliffe EX-24.2 3 EXHIBIT 24.2: CONSENT OF PRICE WATERHOUSE LLP 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated February 24, 1995 appearing on page 23 of Sun Sportswear Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Seattle, Washington June 7, 1995 EX-28.1 4 EXHIBIT 28.1: EMPLOYEE STOCK OPTION PLAN 1 EXHIBIT 28.1 SUN SPORTSWEAR, INC. 1989 EMPLOYEE STOCK OPTION PLAN 1. Purpose. The purpose of the 1989 Employee Stock Option Plan (the "Plan") of Sun Sportswear, Inc., a Washington corporation (the "Company") is to attract, retain, and motivate employees, including employees who may also be directors of the Company and any present and future subsidiaries of the Company, who are chosen to receive options, by giving them an opportunity to acquire Common Stock, no par value, of the Company ("Common Stock"). Options granted under this Plan may be nonqualified options ("NQOs") or incentive stock options ("ISOs") intended to meet the requirements of Section 422A of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"), and if not inconsistent, the requirements of analogous state income tax laws. 2. Administration. This Plan shall be administered by the Board of Directors of the Company (the "Board") or by a committee appointed by the Board (in either case, the "Administrator"). No option shall be granted to (a) an employee who is also an director of the Company except (i) by the Board when a majority of the members of the Board, and a majority of the directors acting in the matter, are disinterested persons, or (ii) by the Administrator when the Administrator is composed of three or more persons having full authority to act in the matter and each member of the Administrator is a disinterested person, or (b) to an officer of the Company except by the Board or (ii) by the Administrator when the Administrator is composed solely of three or more persons having full authority to act in the matter and each member of the Administrator is a disinterested person, unless, in either case, the Administrator determines that compliance with the foregoing provision is not necessary to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and any successor rule adopted by the Securities and Exchange Commission (together with any similar successor rule, "Rule 16b-3") or that Rule 16b-3 is not applicable to the Plan. "Disinterested Person" for this purpose, shall have the same meaning as in Rule 16b-3. The Administrator may delegate nondiscretionary administrative duties to such employees of the Company or a subsidiary as it deems proper. Subject to the provisions of this Plan, the Administrator shall have the authority to select the persons to receive options under this Plan, to fix the number of shares that each optionee may purchase, to set the terms and conditions of each option (including whether each option is an NQO or an ISO), and to determine all other matters relating to this Plan. No member of the Administrator shall be liable for any decision, act, or omission on such member's own part respecting this Plan, or any options granted or shares sold under this Plan, except for those acts or omissions resulting from such member's own willful misconduct. 1 2 3. Eligible Persons 3.1 Generally. ISOs may be granted to employees (including employees who may also be officers or directors) of the Company or any "subsidiary" of the Company, as defined in the applicable provisions (currently Section 425) of the Code (an "Affiliate"), who are selected by the Administrator. NQOs may be granted to employees (including employees who are also officers or directors) of the Company or any Affiliate who are selected by the Administrator. Neither David A. Sabey nor any director who is not also an employee of the Company is eligible to receive options under this Plan. 4. Stock Subject to this Plan. Subject to the other provisions of this Plan, the total number of shares with respect to which options may be granted under this Plan is 600,000 shares of Common Stock. Shares delivered upon the exercise of options may be previously unissued shares, outstanding shares, or repurchased shares. All such delivered shares, whatever their source and whether or not repurchased by the Company in accordance with the terms of the Plan, shall be counted against the 600,000-share limitation. Shares covered by options that expire or terminate shall again become available for the grant of options and shall not be counted against the 600,000-share limitation. The total number of shares with respect to which options may be granted under the Plan is subject to adjustment as provided in the Plan. 5. Grant of Options. The Company may grant options under this Plan at any time and from time to time before the Plan terminates. The Administrator shall specify the date of grant. If the Administrator fails to specify a grant date, the grant date shall be the date of the action taken by the Administrator to grant the option. If an option is approved for a person who is not an employee but is expected to become an employee, the grant date shall be the date the intended optionee is first treated as an employee for payroll purposes. Each optionee shall be evidenced by a written stock option agreement, in form and substance satisfactory to the Company, executed by the company and the person to whom the option is granted. The failure by the Company, the optionee, or both to execute such an option agreement shall not invalidate the grant of the option; no option shall be exercisable, however until the written stock option agreement is executed by the Company and the optionee. The option agreement shall specify whether the option it evidences is an NQO or an ISO. 6. Terms and Conditions to Which All Options Are Subject. All options granted under this Plan shall be subject to the following terms and conditions and any other terms and conditions, not inconsistent with this Plan, that the Administrator imposes when the Company grants an option: 6.1 Time of Option Exercise. Except as necessary to satisfy the requirements of Section 422A of the Code with respect to ISOs, and subject to the other provisions of this Plan, an option shall be exercisable in its entirety at grant or at such times and in such amounts as are specified in the option agreement. Options shall be exercisable only in increments of 100 shares or larger. However, the Administrator, in its 2 3 absolute discretion, may later waive any limitations regarding the time at which an option or portion of an option first becomes exercisable. 6.2 Manner of Exercise. An optionee wishing to exercise an option shall give written notice to the Company to the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price together with such other documentation, including without limitation a stock purchase agreement in form and substance satisfactory to the Administrator, as the Administrator may in its discretion require. The date the Company receives written notice of an exercise hereunder accompanied by any other documentation required by the Administrator, by payment of the exercise price and, if required, by payment of any federal, state or local withholding or employment taxes, including FICA withholding tax, required to be withheld by virtue of exercise of the option, will be considered as the date the option was exercised. An optionee or transferee of an optionee shall not have any privileges as a stockholder with respect to any stock covered by the option until the date of issuance of a stock certificate for the number of shares being acquired. 6.3 Payment. Except as provided below, payment in full, in cash or by check, shall be made for all stock purchased at the time written notice of exercise of an option is given to the Company. Proceeds of any payment shall constitute general funds of the Company. At the time an option is granted or exercised, the Administrator, in the exercise of its absolute discretion, may authorize payment through delivery by the optionee of Common Stock already owned by optionee for all or part of the option price. Any shares so delivered shall be valued at their fair market value as of the date of exercise of the option, as determined under this Plan; provided, however, that if the optionee has exercised any portion of any option granted by the Company by delivery of Common Stock, the optionee may not, within six months following such exercise, exercise any option granted by this Plan by delivery of Common Stock. 6.4 Payment of Withholding and Employment Taxes. At the time of exercise of an option or, in the case of ISOs, upon a disqualifying disposition of shares received upon the exercise of an ISO, the optionee shall remit to the Company in cash all applicable federal, state, and local withholding and employment taxes, including without limitation FICA withholding tax, which, in the Administrator's judgment, may be payable in connection with the exercise or disposition. 6.5 Election Regarding Tax Withholding. If and to the extent authorized by the Administrator in its sole discretion, an optionee may make an election, by means of a form of election to be prescribed by the Administrator, to have shares of Common Stock which are acquired upon exercise of the Option withheld by the Company, or to tender to the Company other shares of Common Stock or other securities of the Company owned by the optionee (if such shares have been held by the optionee for at least six months), to pay all or a portion of the federal, state, and local withholding taxes, including FICA withholding tax, arising in 3 4 connection with the exercise of such Option. Any securities so withheld or tendered will be valued by the Company as of the date of determination of the amount of tax to be withheld as a result of exercise of such option (the "Tax Date"). All such elections are subject to the following restrictions: (a) the election shall be irrevocable; (b) the election must be made on or prior to the Tax Date; and (c) the election is subject at all times to the disapproval of the Administrator. In addition, if the directors and officers of the Company are subject to Section 16 of the Exchange Act (such persons referred to as "Section 16 Persons"), any such election by an optionee who is a Section 16 Person shall be subject to the following additional limitations: (d) the election may not be made within six months of the grant date of the Option the exercise of which resulted in the tax withholding obligation (except that this limitation shall not apply in the event of death or disability of such person occurring prior to the expiration of the six-month period); and (e) such election must be made either (A) at least six months prior to the Tax Date, or (B) in any ten business-day period beginning on the third business day following the date of release by the Company for publication of quarterly or annual summary statements of sales or earnings of the Company. When the Tax Date of a Section 16 Person is deferred until (i) six months after the exercise of an NQO or (ii) the person sells or otherwise disposes of Common Stock received upon the exercise of an ISO, and the person makes the share withholding election described in this paragraph, then the full number of shares of Common Stock for which the Option is being exercised shall be issued to the person upon exercise of the option, but the person shall be unconditionally obligated to tender back and deliver to the Company the proper number of share of Common Stock on the Tax Date. The Administrator may adopt procedures which would allow a participant, as part of the election described in this paragraph, to pay withholding taxes in excess of the statutory minimum, as long as the amount paid does not exceed the participant's estimated total federal, state, and local tax obligations associated with the transaction, including FICA taxes to the extent applicable. 6.6 Exercise After Termination of Employment, Disability, or Death. If for any reason other than disability (as determined in accordance with Section 422A(c)(9) of the Code) or death, an optionee ceases to be employed by the Company or any Affiliate (a "Termination"), then except as otherwise provided in this paragraph all options granted under the Plan, held by the optionee at the date of the Termination (the "Termination Date") shall terminate as of the Termination Date. Options granted 4 5 under this Plan and held by the optionee as of the Termination Date, to the extent exercisable on the Termination Date, may be exercised in whole or in part at any time within three months after the Termination Date or such lesser period as is specified in the option agreement (but in no event after the expiration date of the option). Notwithstanding anything in the preceding sentence, if immediately before the Termination Date the optionee is subject to Section 16(b) of the Exchange Act with respect to the Company's equity securities, then with respect to NQOs held by the optionee, the period following the Termination Date during which an NQO held by the optionee may be exercised shall be seven months (but in no event after the expiration date of the option). The Administrator may in its sole discretion agree with an optionee to extend or modify any of the periods specified above for exercise of an option following the Termination Date. If an optionee's Termination is by reason of disability or death, then options held at the Termination Date, to the extent exercisable on the Termination Date, may be exercised in whole or in part at anytime within one year after the Termination or any lesser period specified in the Option Agreement (but in no event after the expiration date of the option) by the optionee's guardian or legal representative. A transfer of an optionee from the Company to an Affiliate or vice versa, or from one Affiliate to another, or a leave of absence duly authorized by the Company, shall not be deemed a Termination of employment or a break in continuous employment, so long as the Affiliate remains a parent or subsidiary of the Company. An optionee who is employed by an Affiliate but not by the Company shall be deemed to have Terminated employment on the date that the Affiliate is no longer a subsidiary of the Company. 6.7 Changes in Capital Structure. The existence of outstanding options shall not affect the Company's right to effect adjustments, recapitalizations, reorganizations, or other changes in its or any other entity's capital structure or business, any merger or consolidation, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting Common Stock, the dissolution or liquidation of the Company's or any other entity's assets or business, or any other corporate act, whether similar to the events described above or otherwise. Subject to Section 6.8, if the Common Stock is increased or decreased in number or changed into or exchanged for a different number or kind of securities of the Company or any other entity by reason of a stock split, reverse stock split, stock dividend, recapitalization, merger, consolidation, acquisition, separation, reorganization, liquidation, or other event, appropriate adjustments shall be made in (i) the number and class of shares of stock subject to this Plan and each option outstanding under this Plan, and (ii) the exercise price of each outstanding option; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments. Each such adjustment shall be subject to approval by the Board of Directors in its sole discretion. 6.8 Acquisitions and Other Transactions. In connection with the dissolution or liquidation of the Company or a partial liquidation involving more than 50 % of the assets of the Company, a merger or reorganization of the Company in which 5 6 another entity is the survivor, a merger or reorganization of the Company under which more than 50% of the shares of the Company outstanding prior to the merger or reorganization are converted into cash or into another security, a sale of more than 50% of the Company's assets, or a similar event which the Administrator determines, in its absolute discretion, would materially alter the structure of the Company or its ownership, the Administrator, upon 10 business days prior written notice to the optionee, may do one or more of the following: (a) shorten the period during which an option is exercisable (provided it remains exercisable, to the extent otherwise exercisable, for at least 10 business days after the date the notice is given) and provide that options not exercised prior to the effective date of the dissolution, liquidation, reorganization, merger, sale, or other event shall terminate upon the effective date of such event; (b) accelerate any vesting schedule to which an option is subject; (c) arrange to have the surviving corporation grant reasonably equivalent replacement options with adjustments in the number and kind of securities and option prices; or (d) cancel options upon payment to the optionee in cash, with respect to each option to the extent then exercisable, of an amount which, in the absolute discretion of the Administrator, is determined to be equivalent to anyexcess of the fair market value (at the effective time of the dissolution, liquidation, reorganization, merger, sale, or other event) of the consideration that the optionee would have received if the option had been exercised before the effective time over the exercise price of the option. The actions described in the Section may be taken without regard to any resulting tax consequences to the optionee. 6.9 Nonassignability of Option Rights. No option granted under this Plan shall be assignable or otherwise transferable by the optionee except by will or by the laws of descent and distribution. During the life of the optionee, an option shall be exercisable only by the optionee. 6.10 Securities Laws. No option shall be granted or exercised if the Company or its counsel determines that such grant or exercise would not be in compliance with federal or state securities laws. The Company shall be under no obligation, however, to determine compliance with such laws. 7. Terms and Conditions to Which Only NQOs Are Subject. Options granted under this Plan which are designated as NQOs shall be subject to the following terms and conditions, in addition to the terms and conditions set forth in Section 6: 7.1 Exercise Price. The exercise price of an NQO shall be not less than the fair market value of the stock subject to the option on the grant date. 6 7 7.2 Option Term. Unless an earlier expiration date is specified by the Administrator at the time of grant, each NQO granted under this Plan shall expire ten years and two days from the date of its grant. 7.3 Special Blue Sky Restrictions. If required by any state securities authority as a condition of qualifying the offer and sale of options and Common Stock under this Plan, then during the period when such qualification is in effect (the "Blue Sky Period") (i) the exercise price of an NQO granted to any person who owns, directly or indirectly, (or is treated as owning by reason of attribution rules, the current version of which is set forth in Code Section 425) stock of the Company constituting more than ten percent of the total combined voting power of all classes of the outstanding stock of the Company or of any Affiliate (a "Ten Percent Shareholder") shall in no event be less than 110 percent of the fair market value of the stock subject to the option on the grant date; and (ii) an NQO granted to any Ten Percent Shareholder shall expire no later than five years from the grant date. 8. Terms and Conditions to Which Only ISOs Are Subject. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions, in addition to the terms and conditions set forth in Section 6: 8.1 Exercise Price. The exercise price of an ISO shall be determined in accordance with the applicable provisions of the Code and shall in no event be less than the fair market value of the stock covered by the option at the time the option is granted, except that the exercise price of an ISO granted to any Ten Percent Shareholder shall in no event be less than 110 percent of such fair market value. 8.2 Option Term. Unless an earlier expiration date is specified by the Administrator at the time of grant, each ISO granted under this Plan shall expire ten years and two days from the date of its grant, except that an ISO granted to any Ten Percent Shareholder shall expire no later than five years from the date of its grant. 8.3 Disqualifying Dispositions; Notice to Company. If stock acquired by exercise of an ISO granted pursuant to this Plan is disposed of within two years from the date of grant of the option or within one year after the transfer of the stock to the optionee, the holder of the stock immediately prior to the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide such other information regarding the disposition as the Company may reasonably require. 8.4 Limitations on ISO Exercise. Notwithstanding any other provision in this Plan, ISOs options granted to an optionee under this Plan and all ISOs plans of the Company or its Affiliates may not "vest" at a rate of more than $100,000 worth of stock (measured on the grant date(s)) in any calendar year. For purposes of the preceding sentence, an option "vests" when it becomes exercisable for the first time. If, by their terms, such 7 8 ISOs taken together would vest at a faster rate, and unless otherwise provided by the Administrator, the vesting limitation described above shall be applied by deferring the exercisability of those options or portions of options which have the highest per share exercise prices. The options or portions of options, the exercisability of which is so deferred, shall become exercisable on the first day of the first subsequent calendar year during which they may be exercised, as determined by applying these same principles and all other provisions of the Plan including those relating to the expiration and termination of options. In no event, however, will the operation of this Section cause an option to vest before its terms. 9. Determination of Value. For purposes of the Plan, the value of Common Stock or other securities of the Company shall be determined as follows: (a) If the security is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers Automated Quotation System, its fair market value shall be the closing sales price for such stock or the closing bid if no sales were reported, as quoted on such system or exchange (or the largest such exchange) for the date the value is to be determined (or if there are no sales for such date, then for the last preceding business day on which there were sales), as reported in the Wall Street Journal or similar publication. (b) If the stock of the Company is regularly quoted by a recognized securities dealer but selling prices are not reported, its fair market value shall be the mean between the high bid and low asked prices for the stock on the date the value is to be determined (or if there are no quoted prices for that date, then for the last preceding business day on which there were quoted prices). (c) In the absence of an established market for the security the fair market value shall be determined in good faith by the Administrator, with reference to the Company's net worth, prospective earning power, dividend-paying capacity and other relevant factors, including the goodwill of the Company, the economic outlook in the Company's industry, the Company's position in the industry and its management, and the values of stock of other corporations in the same or a similar line of business. 10. Employment Relationship. Nothing in this Plan or any option granted under this Plan shall interfere with or limit in any way the right of the Company or any of its Affiliates to terminate any optionee's employment at any time, nor confer upon any optionee any right to continue in the employ of the Company or any of its Affiliates. 11. Financial Information. If required by any state securities authority as a condition of qualification of the offer and sale of options and Common Stock under this Plan, then during 8 9 the period when such qualification is in effect, the Company shall provide to each option holder a copy of the annual financial statements of the Company as prepared either by the Company or independent certified public accountants of the Company. Such financial statements shall be delivered as soon as practicable following the end of the Company's fiscal year. 12. Shareholder Approval and Term. This Plan shall be subject to approval by the holders of a majority of the outstanding voting stock of the Company within 12 months after its adoption by the Board. Options may be granted, but not exercised, before the shareholders approve this Plan. However, if the shareholders fail to approve the Plan within the required time period, any options granted under this Plan shall be cancelled. This Plan shall terminate ten years after adoption by the Board unless terminated earlier by the Board. The Board may terminate this Plan at any time without shareholder approval. No options shall be granted after termination of this Plan, but termination shall not affect rights and obligations under then outstanding options. 13. Amendment, Suspension, or Termination of This Plan. The Board of Directors may amend, alter, suspend, or discontinue this Plan at any time. Notwithstanding any provision of this Plan or any option agreement entered into in connection with this Plan, this Plan shall automatically terminate, and any options granted under this Plan shall automatically terminate, if the Company does not complete the initial public offering of its Common Stock by December 31, 1989. Without the consent of the optionee, no amendment may affect outstanding options except to conform this Plan and ISOs granted under this Plan to federal or other tax laws relating to ISOs. No amendment shall require shareholder approval unless shareholder approval is required to preserve ISO treatment for tax purposes or the Board otherwise concludes that shareholder approval is advisable in order to comply with the provisions of Rule 16b-3 or otherwise. The Board of Directors may also, at any time without shareholder approval, amend the terms of any option outstanding under the Plan, provided that the optionee consents to such amendment. * * * * Plan adopted by the Board of Directors on: October 2, 1989 Plan amended by the Board of Directors on: April 29, 1994 Plan approved by the Sole Shareholder on: October 2, 1989 Plan amended at the Annual Meeting of Shareholders on: May 20, 1994 9 EX-28.2 5 EXHIBIT 28.2: DIRECTOR STOCK OPTION PLAN 1 EXHIBIT 28.2 SUN SPORTSWEAR, INC. 1989 DIRECTOR STOCK OPTION PLAN 1. Purpose. The purpose of the 1989 Director Stock Option Plan (the "Plan") of Sun Sportswear, Inc., a Washington corporation (the "Company") is to compensate non-employee members of the Company's Board of Directors and to provided a means for those directors to acquire shares of Company Common Stock. 2. Definitions. The following terms used in this Plan have the meanings set forth below: "Administrator" has the meaning given in Section 3. "Annual Grant Date" means, for each calendar year, the date on which the shareholders of the Company have their regular annual meeting. "Board" means the Board of Directors of the Company. "Common Stock" means the common stock no par value of the Company. "Eligible Director" means any person who is a member of the Board and who is not and was not at any time within one year prior to his or her election to the Board a full or part-time employee of the Company or of any subsidiary of the Company; provided, however, that David A. Sabey is not and cannot be an Eligible Director. "Grant Date" means the Initial Grant Date or the Annual Grant Date, as appropriate. "Initial Grant Date" means, with respect to each Eligible Director, the earlier of (i) the date such Eligible Director is first elected as a member of the Board, or (ii) October 2, 1993, except that the Initial Grant Date for Eligible Directors first elected to the Board prior to the initial public offering of Common Stock shall be the date upon which options are first granted under the Company's 1989 Employee Stock Option Plan. "Option" means an option to purchase Shares granted under this Plan. "Option Agreement" means the written agreement described in Section 6. "Shares" means shares of Common Stock. 1 2 3. Administration. This Plan shall be administered by the Board or by a committee composed of disinterested persons appointed by the Board, or by a disinterested person appointed by the Board (in each case, the "Administrator"), unless the Administrator determines that compliance with the foregoing provision is not necessary to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and any successor rule adopted by the Securities and Exchange Commission. "Disinterested Person" for these purposes shall have the meaning set forth in Rule 16b-3. All decisions, interpretations and other actions of the Administrator shall be final and binding on all persons. The Administrator may delegate nondiscretionary administrative duties to such employees of the Company or a subsidiary as it deems proper. No member of the Administrator shall be liable for any decision, act, or omission on such member's own part respecting this Plan, or any options granted or shares sold under this Plan, except for those acts or omissions resulting from such member's own willful misconduct. 4. Shares Subject to Plan. (a) Aggregate Number. Subject to the other provisions of this Plan, the total number of shares with respect to which Options may be granted under this Plan is 60,000 shares of Common Stock. Shares delivered upon exercise of Options may be previously unissued shares, outstanding shares, or repurchased shares. All such delivered shares, however, whatever their source and whether or not repurchased by the Company in accordance with the terms of the Plan, shall be counted against the 60,000-share limitation. Shares covered by Options that expire or terminate shall again become available for the grant of Options and shall not be counted against the 60,000-share limitation. The total number of shares with respect to which Options may be granted under the Plan is subject to adjustment as provided in the Plan. (b) Rights as Shareholder. An Eligible Director shall have no rights as a shareholder with respect to Shares acquired by exercise of an Option until the issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of a stock certificate evidencing the Shares. Subject to Sections (e) and (f) of this Plan, no adjustment shall be made for dividends or other events for which the record date is prior to the date the certificate is issued. 5. Nondiscretionary Grants. (a) Initial Grant. On the Initial Grant Date, each Eligible Director, other than David J. Taylor, shall receive the grant of an Option to purchase 5,000 Shares, and David J. Taylor shall receive the grant of an Option to purchase 10,000 Shares. 2 3 (b) Regular Annual Grants. On each Annual Grant Date, immediately after the annual election of directors, each Eligible Director then in office shall receive the grant of an Option to purchase 1,000 Shares, provided that no Eligible Director shall receive under this Plan Options to purchase an aggregate of more than 20,000 Shares. (c) Adjustment. The number of shares for which Options are granted in accordance with this Section 5 and the number of Shares subject to any Option shall be subject to adjustment in accordance with Section 6(e). (d) Limitation on Other Grants. The Administrator shall have no discretion to grant Options under this Plan to any other person or in any other amount other than as set forth in Section 6(a) or (b) of this Plan. 6. Terms of Option Agreements. Upon the grant of each Option, the Company and the Eligible Director shall enter into an Option Agreement which shall specify the Grant Date and the exercise price, and shall include or incorporate by reference the substance of all of the following provisions and such other provisions consistent with this Plan as the Board may determine: (a) Term. The term of each Option shall be five years from its Grant Date, subject to earlier termination in accordance with Sections 6(f) or 6(g) of this Plan. (b) Exercise Schedule. An Option shall be exercisable on its entirety on the first anniversary of the applicable Grant Date. An Option may exercised only in increments of 100 Shares or larger. (c) Purchase Price. The purchase price of the Shares subject to each Option shall be the fair market value of the stock covered by the Option as of the Grant Date. (d) Transferability. No Option shall be transferable otherwise than by will or the laws of descent and distribution. An Option shall be exercisable during the Eligible Director's lifetime only by the Eligible Director. (e) Changes in Capital Structure. The existence of outstanding Options shall not affect the Company's right to effect adjustments, recapitalizations, reorganizations, or other changes in its or any other entity's capital structure or business, any merger or consolidation, any issuance of bonds, debenture, preferred or prior preference stock ahead of or affecting Common Stock, the dissolution or liquidation of the Company's or any other entity's assets or business, or any other corporate act, whether similar to the events described above or otherwise. Subject to Section 6(f) of this Plan, if the Common 3 4 Stock is increased or decreased in number or changed into or exchanged for a different number or kind of securities of the Company or any other entity by reason of a stock split, reverse stock split, stock dividend, recapitalization, merger, consolidation, acquisition, separation, reorganization, liquidation, or other event, appropriate adjustments shall be made in (i) the number and class of shares of stock subject to this Plan and each Option outstanding under this Plan, and (ii) the exercise price of each outstanding Option; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments. Each such adjustment shall be subject to approval by the Administrator in its sole discretion. (f) Acquisitions and Other Transactions. In connection with the dissolution or liquidation of the Company or a partial liquidation involving more than 50 % of the assets of the Company, a merger or reorganization of the Company in which another entity is the survivor, a merger or reorganization of the Company under which more than 50% of the shares of the Company outstanding prior to the merger or reorganization are converted into cash or into another security, a sale of more than 50% of the Company's assets, or a similar event which the Administrator determines would materially alter the structure of the Company or its ownership, the Administrator, upon 10 business days prior written notice to the Eligible Director, may do one or more of the following: (i) shorten the period during which an Option is exercisable (provided it remains exercisable, to the extent otherwise exercisable, for at least 10 business days after the date the notice is given) and provide that Options not exercised prior to the effective date of the dissolution, liquidation, reorganization, merger, sale, or other event shall terminate upon the effective date of such event; (ii) accelerate any vesting schedule to which an Option is subject; (iii) arrange to have the surviving corporation grant reasonably equivalent replacement options with adjustments in the number and kind of securities and option prices; or (iv) cancel Options upon payment to the Eligible Director in cash, with respect to each Option to the extent then exercisable, of an amount which, in the absolute discretion of the Administrator, is determined to be equivalent to any excess of the fair market value (at the effective time of the dissolution, liquidation, reorganization, merger, sale, or other event) of the consideration that the optionee would have received if the option had been exercised before the effective time over the exercise price of the option. 4 5 The actions described in the Section may be taken without regard to any resulting tax consequences to the Eligible Director. (g) Termination of Directorship; Death; Disability. If for any reason other than death or permanent and total disability, an Eligible Director ceases to be a member of the Board, Options held at the date of termination (to the extent then exercisable) may be exercised in whole or in part at any time within three months after the date of such termination, or such other period as is specified in the Option Agreement but not thereafter. Notwithstanding anything in the preceding sentence, if immediately before the Termination Date the Eligible Director is subject to Section 16(b) of the Exchange Act with respect to the Company's equity securities, then with respect to Options held by the Eligible Director, the period following the termination date during which an Option held by the optionee may be exercised shall be seven months. If an Eligible Director dies or becomes permanently and totally disabled (within the meaning of Section 422(e) (3) of the Code) while he or she is a member of the Board (or, in the event of death, within the period that the Option remains exercisable after the Eligible Director ceases to be a member of the Board), Options then held (to the extent exercisable on the date of death or permanent and total disability) may be exercised in whole or in part by the Eligible Director, by the Eligible Director's personal representative, or by the person to whom the Option is transferred by will or the laws of descent and distribution, at anytime within one year after the date of death or permanent and total disability of the Eligible Director or if lesser, the period specified in the Option Agreement. Notwithstanding any provision of this Section 6(g), Options shall in no case be exercisable after the expiration date of the Option as provided in Section 5(a) of this Plan. (h) Modification, Extension and Renewal of Options. Within the limitations of this Plan, the Administrator may modify, extend or renew outstanding Options or may accept the cancellation thereof (to the extent not previously exercised) for the granting of new Options in substitution therefor. Notwithstanding the foregoing, no Options granted pursuant to subsections 6(a) or 6(b) may be modified and no modification shall, without the consent of the Optionee, alter or impair his or her rights or obligations under an Option. The failure by the Company, the Eligible Director, or both, to execute an Option Agreement shall not invalidate the grant of the Option; no Option shall be exercisable, however, until the written Option Agreement is executed by the Company and the Eligible Director. 5 6 7. Payment and Taxes upon Exercise of Options. (a) Payment. Except as provided below, payment in full, in cash or by check, shall be made for all stock purchased at the time the written notice of exercise of an option is given to the Company. Proceeds of any payment shall constitute general funds of the Company. At the option of an Eligible Director, the Eligible Director may make payment through delivery by the Eligible Director of Common Stock already owned by the Eligible Director for all or part of the option price. Any shares so delivered shall be valued at their fair market value as of the date of exercise of the Option, as determined under this Plan; provided, however, that if an Eligible Director has exercised any portion of any Option granted by the Company by delivery of Common Stock, the Eligible Director may not, within six months following such exercise, exercise any Option granted by this Plan by delivery of Common Stock. (b) Payment of Withholding and Employment Taxes. At the time of exercise of an Option, the Eligible Director shall remit to the Company in cash all applicable Federal, State, and Local withholding and employment taxes, including without limitation, FICA withholding tax, which, in the Administrator's judgment, may be payable in connection with the exercise or disposition. (c) Election Regarding Tax Withholding. If and to the extent authorized by the Administrator, an Eligible Director may make an election, by means of a form of election to be prescribed by the Administrator, to have shares of Common Stock which are acquired upon exercise of the Option withheld by the Company, or to tender to the Company other shares of Common Stock or other securities of the Company owned by the Eligible Director (if such shares have been held by the Eligible Director for at least six months), to pay all or a portion of the Federal, State, and Local withholding taxes, including FICA withholding tax, arising in connection with the exercise of such Option. Any securities so withheld or tendered will be valued by the Company as of the date of determination of the amount of tax to be withheld as a result of exercise of such option (the "Tax Date"). All such elections are subject to the following restrictions: (i) the election shall be irrevocable; (ii) the election must be made on or prior to the Tax Date; and (iii) the election is subject at all times to the disapproval of the Administrator. In addition, if the Eligible Directors of the Company are subject to Section 16 of the Exchange Act (such persons referred to as 6 7 "Section 16 Persons"), any such election by an Eligible Director who is a Section 16 Person shall be subject to the following additional limitations: (iv) the election may not be made within six months of the grant date of the Option the exercise of which resulted in the tax withholding obligation (except that this limitation shall not apply in the event of death or disability of such person occurring prior to the expiration of the six-month period); and (v) such election must be made either (A) at least six months prior to the Tax Date, or (B) in any ten business-day period beginning on the third business day following the date of release by the Company for publication of quarterly or annual summary statements of sales or earnings of the Company. When the Tax Date of a Section 16 Person is deferred until six months after the exercise of an Option and the person makes the share withholding election described in this paragraph, then the full number of Shares for which the Option is being exercised shall be issued to the person upon exercise of the Option, but the person shall be unconditionally obligated to tender back and deliver to the Company the proper number of shares of Common Stock on the Tax Date. The Administrator may adopt procedures which would allow an Eligible Director, as part of the election described in this paragraph, to pay withholding taxes in excess of the statutory minimum, as long as the amount paid does not exceed the Eligible Director's estimated total Federal, State, and Local tax obligations associated with the transaction, including FICA taxes to the extent applicable. 8. Use of Proceeds. Proceeds from the sale of Shares pursuant to this Plan shall be used by the Company for general corporate purposes. 9. Determination of Value. For purposes of the Plan, the value of Shares or other securities of the Company shall be determined as follows: (a) If the security is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers Automated Quotation System, its fair market value shall be the closing sales price for the Security or the closing bid if no sales were reported, as quoted on such system or exchange (or the largest such exchange) for the date the value is to be determined (or if there are no sales for such date, then for the last preceding business day on which there were sales), as reported in the Wall Street Journal or similar publication. (b) If the security is regularly quoted by a recognized securities dealer but selling prices are not reported, its fair market value shall be the mean between the high bid and 7 8 low asked prices for the security on the date the value is to be determined (or if there are no quoted prices for that date, then for the last preceding business day on which there were quoted prices). (c) In the absence of an established market for the security the fair market value shall be determined in good faith by the Administrator, with reference to the Company's net worth, prospective earning power, dividend-paying capacity and other relevant factors, including the goodwill of the Company, the economic outlook in the Company's industry, the Company's position in the industry and its management, and the values of stock of other corporations in the same or a similar line of business. 10. Legal Requirements. No option shall be granted or exercised if the Company or its counsel determines that such grant or exercise would not be in compliance with Federal or State securities laws. The Company shall be under no obligation, however, to determine compliance with such laws. 11. Amendment or Termination of Plan. The Board of Directors may amend, alter, suspend, or discontinue this Plan at any time, except that the provisions of this Plan relating to (i) the persons eligible to receive Options; (ii) the timing of grants of Options; (iii) the amounts of securities to be granted to individual recipients of Options; or (iv) the requirement of administration by a disinterested person or persons, shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code or the rules thereunder, unless the Administrator determines that compliance with the foregoing provision is not necessary to comply with Rule 16b-3. Notwithstanding any provision of this Plan or any Option Agreement, this Plan shall automatically terminate,and any Options outstanding under this Plan shall automatically terminate, if the Company does not complete the initial public offering of its Shares by December 31, 1989. Without the consent of the holder of the Option, no amendment may affect outstanding Options except to conform this Plan and Options granted under this Plan to Federal tax or other laws relating to Options. No amendment shall require shareholder approval unless (a) the amendment would: (i) increase the total number of shares reserved for issuance under this Plan or issuable to any individual under this Plan; (ii) extend the term of this Plan; (iii) change the class of persons eligible to receive Options under this Plan; 8 9 (iv) change the timing of the grants of Options under this Plan, or (b) the Board concludes that shareholder approval is otherwise advisable in order to comply with the provisions of Rule 16b-3 or otherwise, unless the Board determines that compliance with the foregoing provisions is not necessary to comply with Rule 16b-3. The Administrator may also, at any time without shareholder approval, amend the terms of any Option outstanding under the Plan, provided that the Eligible Director consents to such amendment. 12. Shareholder Approval and Term. This Plan shall be subject to approval by the holders of a majority of the outstanding voting stock of the Company within 12 months after its adoption by the Board. Options may be granted, but not exercised, before the shareholders approve this Plan. However, if the shareholders fail to approve the Plan within the required time period, any Options granted under this Plan shall be cancelled. This Plan shall terminate ten years after adoption by the Board unless terminated earlier by the Board. The Board may terminate this Plan at any time without shareholder approval. No Options shall be granted after termination of this Plan, but termination shall not affect rights and obligations under then outstanding Options. * * * * * * * * * * * * Plan adopted by the Board of Directors on: October 2, 1989 Plan approved by the Sole Shareholder on: October 2, 1989 9 -----END PRIVACY-ENHANCED MESSAGE-----