------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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C3, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
3800 GATEWAY BOULEVARD, SUITE 311
NORTH CAROLINA MORRISVILLE, NORTH CAROLINA 27560 56-0308470
-------------- --------------------------------- ----------
(State or other jurisdiction of (Address of principal executive offices) (I.R.S. Employer
incorporation or Identification Number)
organization)
</TABLE>
1997 OMNIBUS STOCK PLAN OF
C3, INC.
----------------------
(Full title of the plan)
Jeff N. Hunter
Chief Executive Officer
C3, Inc.
3800 Gateway Boulevard, Suite 311
Morrisville, North Carolina 27560
(919) 468-0399
--------------
(Name, address and telephone number, including area code,
of agent for service)
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TITLE OF PROPOSED PROPOSED
SECURITIES AMOUNT MAXIMUM OFFERING MAXIMUM AMOUNT OF
TO BE TO BE PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE(1) FEE(1)
---------- ---------- ------------- -------------- ------
Common Stock,
no par value 252,933 shares $7.22-$9.19 $2,003,124 $528.82
- ------------
</TABLE>
(1) Pursuant to Rule 457(c) and (h)(1), based on (i) the average of the high
($7.438) and low ($7.000) sales prices of the Registrant's common stock on
December 16, 1999, as reported on the Nasdaq National Market (163,112 shares);
and (ii) the average option price ($9.19) for shares available for issuance
upon the exercise of outstanding options granted under the Registrant's 1997
Omnibus Stock Plan (89,821 shares).
------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
- ------- ----------------------------------------
The following documents filed by C3, Inc. (the "Company") with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K and Form 10-K/A
for the fiscal year ended December 31, 1998, filed with the Commission
on March 18, 1999 and June 1, 1999, respectively, pursuant to Section
13 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999,
filed with the Commission on May 17, 1999, August 16, 1999 and November
15, 1999, respectively.
(c) The Company's Current Report on Form 8-K filed with the
Commission on March 11, 1999.
(d) The description of the Company's Common Stock, no par
value, contained in the Company's Registration Statement on Form 8-A,
filed pursuant to Section 12(g) of the Exchange Act with the Commission
on November 7, 1997, including any amendment or report filed for the
purpose of updating such description.
(e) The description of the Company's Rights Agreement that is
contained in the Company's Registration Statement on Form 8-A filed
with the Commission on March 11, 1999.
(f) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the period referred to in (a),
above.
All documents subsequently filed by the Company 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 remaining unsold shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
the filing of such documents.
Pursuant to General Instruction E to Form S-8, the contents of
Registration Statement No. 333-43613 on Form S-8 are hereby incorporated by
reference to this Registration Statement on Form S-8.
ITEM 4. DESCRIPTION OF SECURITIES.
- ------- --------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
- ------- ---------------------------------------
The legality of the securities offered hereby has been passed upon by
the firm of Womble Carlyle Sandridge & Rice, PLLC, counsel to the Company.
Attorneys of the firm hold an aggregate of approximately 21,115 shares of Common
Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
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Sections 55-8-50 through 55-8-58 of the North Carolina Business
Corporation Act contain specific provisions relating to indemnification of
directors and officers of North Carolina corporations. In general, such sections
provide that (i) a corporation must indemnify a director or officer who is
wholly successful in his defense of a proceeding to which he is a party because
of his status as such, unless limited by the articles of incorporation, and (ii)
a corporation may indemnify a director or officer if he is not wholly successful
in such defense and it is determined as provided by statute that the director or
officer meets a certain standard of conduct, but the corporation may not
indemnify a director or officer if he is liable to the corporation or is
adjudged liable on the basis that personal benefit was improperly received by
him. A director or officer of a corporation who is a party to a
<PAGE>
proceeding may also apply to the courts for indemnification, and the court may
order indemnification under certain circumstances set forth in the statute. A
corporation may, in its articles of incorporation or bylaws or by contract or
resolution, provide indemnification in addition to that provided by statute,
subject to certain conditions.
The Company's bylaws provide for the indemnification of any director or
officer of the Company against liabilities and litigation expenses arising out
of his status as such, excluding (i) any liabilities or litigation expenses
relating to activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interest of the Company and (ii)
that portion of any liabilities or litigation expenses with respect to which
such person is entitled to receive payment under any insurance policy.
The Company's articles of incorporation provide for the elimination of
the personal liability of each director of the Company to the fullest extent
permitted by law.
The Company has obtained directors' and officers' liability insurance,
under which directors and officers of the Company may be insured or indemnified
against certain liabilities which they may incur in their capacity as such.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
- ------- ------------------------------------
Not applicable.
ITEM 8. EXHIBITS.
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The following exhibits are filed as a part of this Registration
Statement:
NUMBER DESCRIPTION
------ -----------
4.1 Amended and Restated Articles of Incorporation of C3,
Inc. (incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-1 (File
No. 333-36809)).
4.2 Articles of Amendment of C3, Inc. (incorporated by
reference to Item 3.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998,
filed with the Commission on March 18, 1999).
4.3 Amended and Restated Bylaws of C3, Inc. (incorporated by
reference to Exhibit 3.2 of the Company's Registration
Statement on Form S-1 (File No. 333-36809)).
4.4 Shareholders' Rights Agreement of C3, Inc. (incorporated by
reference to Exhibit 3.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998,
filed with the Commission on March 18, 1999).
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as to the
legality of the Common Stock being registered.
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC (included
in Exhibit 5).
23.2 Consent of Deloitte & Touche, LLP.
24 Power of Attorney (included in the signature page to this
Registration Statement).
99 1997 Omnibus Stock Plan of C3, Inc., as amended.
ITEM 9. UNDERTAKINGS.
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(a) The Company 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;
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (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
with or furnished to the Commission by the Company pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of 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 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, C3, Inc.
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 Town of Morrisville, State of North Carolina, on this 20th
day of December, 1999.
C3, INC.
By: /s/ Jeff N. Hunter
--------------------
Jeff N. Hunter
Chairman and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
on the signature pages to this Registration Statement hereby constitutes and
appoints Jeff N. Hunter and Mark W. Hahn, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned, and in his name, place and stead, in any
and all capacities to sign any and all amendments, including post-effective
amendments, exhibits thereto and other documents in connection therewith, to
this Registration Statement, to make such changes in the Registration Statement
as such attorneys-in-fact deems appropriate, 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 so and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully 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 by the following persons in the
capacities indicated on December 20, 1999.
/s/ Jeff N. Hunter /s/ Richard G. Hartigan, Jr.
------------------ ----------------------------
Jeff N. Hunter Richard G. Hartigan, Jr.
CHIEF EXECUTIVE OFFICER AND DIRECTOR DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
/s/ Barbara Kotlikoff /s/ Kurt Nassau
--------------------- ---------------
Barbara Kotlikoff Kurt Nassau
DIRECTOR DIRECTOR
/s/ Howard Rubin /s/ Frederick A. Russ
---------------- ---------------------
Howard Rubin Frederick A. Russ
DIRECTOR DIRECTOR
<PAGE>
/s/ Ollin B. Sykes /s/ Cecil D. Raynor
------------------ -------------------
Ollin B. Sykes Cecil D. Raynor
DIRECTOR DIRECTOR
/s/ Mark W. Hahn
----------------
Mark W. Hahn
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-8 OF
C3, INC.
NUMBER DESCRIPTION
------ -----------
4.1 Amended and Restated Articles of Incorporation of C3,
Inc. (incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-1 (File
No. 333-36809)).*
4.2 Articles of Amendment of C3, Inc. (incorporated by
reference to Item 3.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998,
filed with the Commission on March 18, 1999).*
4.3 Amended and Restated Bylaws of C3, Inc. (incorporated by
reference to Exhibit 3.2 of the Company's Registration
Statement on Form S-1 (File No. 333-36809)).*
4.4 Shareholders' Rights Agreement of C3, Inc. (incorporated by
reference to Exhibit 3.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998,
filed with the Commission on March 18, 1999).*
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC, as to the
legality of the Common Stock being registered.
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC (included
in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included in the signature page to this
Registration Statement).
99 1997 Omnibus Stock Plan of C3, Inc., as amended.
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* Incorporated by reference.
EXHIBIT 5
December 20, 1999
C3, Inc.
d/b/a Charles & Colvard
3800 Gateway Boulevard, Suite 310
Morrisville, North Carolina 27560
Re: 1997 Omnibus Stock Plan of C3, Inc.
Ladies and Gentlemen:
We have served as counsel for C3, Inc. (the "Company") in connection
with its registration under the Securities Act of 1933, as amended (the
"Securities Act"), of 252,933 shares of its common stock, no par value (the
"Shares"), which are proposed to be offered and sold pursuant to the 1997
Omnibus Stock Option Plan of C3, Inc., as amended (the "Plan"), and pursuant to
the Company's Registration Statement on Form S-8 (the "Registration Statement")
to be filed with the Securities and Exchange Commission (the "Commission") with
respect to the Shares.
We have reviewed the Company's articles of incorporation and
bylaws, each as amended to date, and have examined the originals, or copies
certified or otherwise identified to our satisfaction, of corporate records of
the Company, including minute books of the Company as furnished to us by the
Company, certificates of public officials and of representatives of the Company,
statutes and other instruments and documents, as a basis for the opinions
hereinafter expressed. In rendering this opinion, we have relied upon
certificates of public officials and officers of the Company with respect to the
accuracy of the factual matters contained in such certificates. We also have
reviewed the Plan and the Registration Statement.
In connection with such review, we have assumed with your
permission (1) the genuineness of all signatures; (2) the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies; and (3) the
proper issuance and accuracy of certificates of public officials and officers
and agents of the Company. In rendering opinions as to future events, we have
assumed the facts and law existing on the date hereof.
Based upon the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that the Shares
have been duly authorized and, when issued and paid for in accordance with the
terms of the Plan, will be validly issued, fully paid and nonassessable.
This opinion is limited to the laws of the State of North
Carolina. This opinion is rendered as of the date hereof, and we undertake no
obligation to advise you of any changes in applicable law or any other matters
that may come to our attention after the date hereof.
We hereby consent to the filing of this opinion with the
Commission as Exhibit 5 to the Registration Statement. In giving this consent,
we do not admit that we are within the category of persons whose consent is
required by Section 7 of the Securities Act, or other rules and regulations of
the Commission thereunder.
WOMBLE CARLYLE SANDRIDGE & RICE
A PROFESSIONAL LIMITED LIABILITY COMPANY
By: /s/ Cyrus M. Johnson, Jr.
---------------------------
Cyrus M. Johnson, Jr.
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
C3, Inc. on Form S-8 of our report dated February 18, 1999, appearing in the
Annual Report on Form 10-K of C3, Inc. for the year ended December 31, 1998.
/s/ DELOITTE & TOUCHE, LLP
Raleigh, North Carolina
December 21, 1999
Exhibit 99
1997 OMNIBUS STOCK PLAN
OF
C3, INC.*
*CONTAINING AMENDMENTS THROUGH DECEMBER 11, 1997
<PAGE>
1997 OMNIBUS STOCK PLAN
OF
C3, INC.
1. PURPOSE
The purpose of the 1997 Omnibus Stock Plan of C3, Inc. (the "Plan") is
to encourage and enable selected employees, directors and independent
contractors of C3, Inc. (the "Corporation") and its related corporations to
acquire or to increase their holdings of common stock of the Corporation (the
"Common Stock") and other proprietary interests in the Corporation in order to
promote a closer identification of their interests with those of the Corporation
and its shareholders, thereby further stimulating their efforts to enhance the
efficiency, soundness, profitability, growth and shareholder value of the
Corporation. This purpose will be carried out through the granting of benefits
(collectively referred to herein as "Awards") to selected employees, independent
contractors and directors, including but not necessarily limited to the granting
of incentive stock options ("Incentive Options"), nonqualified stock options
("Nonqualified Options"), stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock Awards"), and restricted units ("Restricted Units") to
such participants. Incentive Options and Nonqualified Options shall be referred
to herein collectively as "Options." Restricted Stock Awards and Restricted
Units shall be referred to herein collectively as "Restricted Awards."
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Board of Directors of the
Corporation, or upon its delegation to the Compensation Committee of the Board
of Directors, by the Committee (in either case hereinafter the "Committee"). The
Committee shall include no fewer than the minimum number of "non-employee
directors," as such term is defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as may be
required by Rule 16b-3.
(b) Any action of the Committee with respect to the Plan may be taken
by a written instrument signed by all of the members of the Committee and any
such action so taken by written consent shall be as fully effective as if it had
been taken by a majority of the members at a meeting duly held and called.
Subject to the provisions of the Plan, and unless authority is granted to the
chief executive officer as provided in Section 2(c), the Committee shall have
full and final authority in its discretion to take any action with respect to
the Plan including, without limitation, the authority (i) to determine all
matters relating to Awards, including selection of individuals to be granted
Awards, the types of Awards, the number of shares of the Common Stock, if any,
subject to an Award, and all terms, conditions, restrictions and limitations of
an Award; (ii) to prescribe the form or forms of the Agreements evidencing any
Awards granted under the Plan; (iii) to establish, amend and rescind rules and
regulations for the administration of the Plan; and (iv) to construe and
interpret the Plan and Agreements evidencing Awards granted under the Plan, to
establish and interpret rules and regulations for administering the Plan and to
make all other determinations deemed necessary or advisable for administering
the Plan. In addition, the Committee shall have authority, in its sole
discretion, to accelerate the date that any Award which was not otherwise
exercisable or vested shall become exercisable or vested in whole or in part
without any obligation to accelerate such date with respect to any other Awards
granted to any recipient.
(c) Notwithstanding Section 2(b), the Committee may delegate to the
chief executive officer of the Corporation the authority to grant Awards, and to
make any or all of the determinations reserved for the Committee in the Plan and
summarized in subsection (b) (i) with respect to such Awards, to any individual
who, at the time of said grant or other determination, (i) is not deemed to be
an officer or director of the Corporation within the meaning of Section 16 of
the Exchange Act; (ii) is not deemed to be a Covered Employee; and (iii) is
otherwise eligible under Section 5. To the extent that the Committee has
delegated authority to grant Awards pursuant to this Section 2(c) to the chief
executive officer, references to the Committee shall include references to the
chief executive officer, subject, however, to the requirements of the Plan, Rule
16b-3 and other applicable law.
3. EFFECTIVE DATE
<PAGE>
The effective date of the Plan shall be October 1, 1997 (the "Effective
Date"). Awards may be granted under the Plan on and after the effective date,
but no awards will be granted after September 30, 2007.
4. SHARES OF STOCK SUBJECT TO THE PLAN; AWARD LIMITATIONS
(a) The number of shares of Common Stock that may initially be issued
pursuant to Awards shall be 477,979 shares of authorized but unissued shares of
the Corporation, subject to adjustments and increases as provided in this
Section 4. The maximum number of shares authorized for issuance under the Plan
shall be increased at any time and from time to time by an amount (the
"Adjustment Amount") so that the maximum number of shares authorized for
issuance under the Plan shall be equal to (i) twenty percent (20%) of the
authorized and issued shares of Common Stock as of such date less (ii) the
number of shares of Common Stock subject to outstanding options granted under
the 1996 Stock Option Plan of C3, Inc. or any other prior stock option plan (the
"Prior Plans").
(b) The Corporation hereby reserves sufficient authorized shares of
Common Stock to meet the grant of Awards hereunder. Any shares subject to an
Award which is subsequently forfeited, expires or is terminated may again be the
subject of an Award granted under the Plan. To the extent that any shares of
Common Stock subject to an Award are not delivered to a Participant (or his
beneficiary) because the Award is forfeited or canceled or because the Award is
settled in cash, such shares shall not be deemed to have been issued for
purposes of determining the maximum number of shares of Common Stock available
for issuance under the Plan. If the option price of an Option granted under the
Plan (or any Prior Plan) is satisfied by tendering shares of Common Stock, only
the number of shares issued net of the shares of Common Stock tendered shall be
deemed issued for purposes of determining the maximum number of shares of Common
Stock available for issuance under the Plan.
(c) If there is any change in the shares of Common Stock because of a
merger, consolidation or reorganization involving the Corporation or a related
corporation, or if the Board of Directors of the Corporation declares a stock
dividend or stock split distributable in shares of Common Stock, or if there is
a change in the capital stock structure of the Corporation or a related
corporation affecting the Common Stock, the number of shares of Common Stock
reserved for issuance under the Plan shall be correspondingly adjusted, and the
Committee shall make such adjustments to Awards or to any provisions of this
Plan as the Committee deems equitable to prevent dilution or enlargement of
Awards.
(d) Subject to the terms of this Section 4, the following limitations
upon Awards shall apply:
(i) The maximum number of shares of Common Stock that may be
issued pursuant to Incentive Options shall be 1,187,695 shares, which
number shall be equal to twenty percent (20%) of the number of
outstanding shares of Common Stock as of the effective date of the
consummation of the initial public offering of the Common Stock.
(ii) In no event shall an employee be granted Awards under the
Plan for more than 100,000 shares of Common Stock (or the equivalent
value thereof based on the fair market value of the Common Stock on the
date of grant of the Award) during any calendar year.
5. ELIGIBILITY
An Award may be granted only to an individual who satisfies the
following eligibility requirements on the date the Award is granted:
(a) The individual is either (i) an employee of the Corporation or a
related corporation, (ii) a director of the Corporation or a related
corporation, or (iii) an independent contractor, consultant or advisor
(collectively, "independent contractors") providing services to the Corporation
or a related corporation. For this purpose, an individual shall be considered to
be an "employee" only if there exists between the individual and the Corporation
or a related corporation the legal and bona fide relationship of employer and
employee.
(b) With respect to the grant of Incentive Options, the individual does
not own, immediately before the time that the Incentive Option is granted, stock
possessing more than ten percent of the total combined voting
<PAGE>
power of all classes of stock of the Corporation or a related corporation;
provided, however, that an individual owning more than ten percent of the total
combined voting power of all classes of stock of the Corporation or a related
corporation may be granted an Incentive Option if the price at which such Option
may be exercised is greater than or equal to 110 percent (110%) of the fair
market value of the shares on the date the Option is granted and the period of
the Option does not exceed five years. For this purpose, an individual will be
deemed to own stock which is attributable to him under Section 424(d) of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The individual, being otherwise eligible under this Section 5, is
selected by the Committee as an individual to whom an Award shall be granted (a
"Participant").
6. OPTIONS
(a) GRANT OF OPTIONS: Subject to the limitations of the Plan, the
Committee may in its sole and absolute discretion grant Options to such eligible
individuals in such numbers, upon such terms and at such times as the Committee
shall determine. Both Incentive Options and Nonqualified Options may be granted
under the Plan. To the extent necessary to comply with Section 422 of the Code
and related regulations, (i) if an Option is designated as an Incentive Option
but does not qualify as such under Section 422 of the Code, the Option (or
portion thereof) shall be treated as a Nonqualified Option; and (ii) the
provisions relating to the grant and terms of Incentive Options (including but
not limited to the provisions in Section 4(d)(i) herein regarding the maximum
number of shares available for issuance pursuant to such Incentive Options)
shall be deemed to be a separate plan.
(b) OPTION PRICE: The price per share at which an Option may be
exercised (the "Option Price") shall be established by the Committee at the time
the Option is granted and shall be set forth in the terms of the agreement
evidencing the grant of the Option; provided, that in the case of an Incentive
Option, the Option Price shall be no less than the fair market value per share
of the Common Stock on the date the Option is granted. In addition, the
following rules shall apply:
(i) An Incentive Option shall be considered to be granted on
the date that the Committee acts to grant the Option, or on any later
date specified by the Committee as the effective date of the Option. A
Nonqualified Option shall be considered to be granted on the date the
Committee acts to grant the Option or any other date specified by the
Committee as the date of grant of the Option.
(ii) The fair market value of the shares shall be determined
in good faith by the Committee in accordance with the following
provisions: (i) if the shares of Common Stock are listed for trading on
the New York Stock Exchange or the American Stock Exchange or included
in The Nasdaq National Market, the fair market value shall be the
closing sales price of the shares on the New York Stock Exchange or the
American Stock Exchange or as reported in The Nasdaq National Market
(as applicable) on the date immediately preceding the date the Option
is granted, or, if there is no transaction on such date, then on the
trading date nearest preceding the date the Option is granted for which
closing price information is available and, provided further, if the
shares are quoted on The Nasdaq System but are not included in The
Nasdaq National Market, the fair market value shall be the mean between
the high bid and low asked quotations in The Nasdaq System on the date
immediately preceding the date the Option is granted for which such
information is available; or (ii) if the shares of Common Stock are not
listed or reported in any of the foregoing, then fair market value
shall be determined by the Committee in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations,
or in any other manner consistent with the Code and accompanying
regulations.
(iii) In no event shall there first become exercisable by an
employee in any one calendar year Incentive Options granted by the
Corporation or any related corporation with respect to shares having an
aggregate fair market value (determined at the time an Incentive Option
is granted) greater than $100,000.
(c) OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS
(i) The period during which an Option may be exercised (the
"Option Period") shall be determined by the Committee at the time the
Option is granted. With respect to Incentive Options, such
<PAGE>
period shall not extend more than ten years from the date on which the
Option is granted. Any Option or portion thereof not exercised before
expiration of the Option Period shall terminate.
(ii) An Option may be exercised by giving written notice to
the Corporation at such place as the Corporation shall direct. Such
notice shall specify the number of shares to be purchased pursuant to
an Option and the aggregate purchase price to be paid therefor, and
shall be accompanied by the payment of such purchase price. Such
payment shall be in the form of (A) cash; (B) shares of Common Stock
owned by the Participant at the time of exercise; (C) shares of Common
Stock withheld upon exercise; (D) delivery of written notice of
exercise to the Corporation and delivery to a broker of written notice
of exercise and irrevocable instructions to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the Option
Price; or (E) a combination of the foregoing methods, as elected by the
Participant. Shares tendered or withheld in payment on the exercise of
an Option shall be valued at their fair market value on the date of
exercise, as determined by the Committee by applying the provisions of
Section 6(b)(ii).
(iii) No Option granted to a Participant who was an employee
at the time of grant shall be exercised unless the Participant is, at
the time of exercise, an employee as described in Section 5(a), and has
been an employee continuously since the date the Option was granted,
subject to the following:
(A) An Option shall not be affected by any change in
the terms, conditions or status of the Participant's
employment, provided that the Participant continues to be an
employee of the Corporation or a related corporation.
(B) The employment relationship of a Participant
shall be treated as continuing intact for any period that the
Participant is on military or sick leave or other bona fide
leave of absence, provided that the period of such leave does
not exceed ninety days, or, if longer, as long as the
Participant's right to reemployment is guaranteed either by
statute or by contract. The employment relationship of a
Participant shall also be treated as continuing intact while
the Participant is not in active service because of
disability. The Committee shall determine whether a
Participant is disabled within the meaning of this paragraph.
(C) If the employment of a Participant is terminated
because of disability within the meaning of subparagraph (B),
or if the Participant dies while he is an employee or dies
after the termination of his employment because of disability,
the Option may be exercised only to the extent exercisable on
the date of the Participant's termination of employment or
death while employed (the "termination date"), except that the
Committee may in its discretion accelerate the date for
exercising all or any part of the Option which was not
otherwise exercisable on the termination date. The Option must
be exercised, if at all, prior to the first to occur of the
following, whichever shall be applicable: (X) the close of the
period of twelve months next succeeding the termination date;
or (Y) the close of the Option Period. In the event of the
Participant's death, such Option shall be exercisable by such
person or persons as shall have acquired the right to exercise
the Option by will or by the laws of intestate succession.
(D) If the employment of the Participant is
terminated for any reason other than disability (as defined in
subparagraph (B)) or death or for "cause," his Option may be
exercised to the extent exercisable on the date of such
termination of employment, except that the Committee may in
its discretion accelerate the date for exercising all or any
part of the Option which was not otherwise exercisable on the
date of such termination of employment. The Option must be
exercised, if at all, prior to the first to occur of the
following, whichever shall be applicable: (X) the close of the
period of 90 days next succeeding the termination date; or (Y)
the close of the Option Period. If the Participant dies
following such termination of employment and prior to the
earlier of the dates specified in (X) or (Y) of this
subparagraph (D), the Participant shall be treated
<PAGE>
as having died while employed under subparagraph (C)
immediately preceding (treating for this purpose the
Participant's date of termination of employment as the
termination date). In the event of the Participant's death,
such Option shall be exercisable by such person or persons as
shall have acquired the right to exercise the Option by will
or by the laws of intestate succession.
(E) If the employment of the Participant is
terminated for "cause," his Option shall lapse and no longer
be exercisable as of the effective time of his termination of
employment, as determined by the Committee. For purposes of
this subparagraph (E) and subparagraph (D), the Participant's
termination shall be for "cause" if such termination results
from the Participant's personal dishonesty, gross
incompetence, willful misconduct, breach of a fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, regulation
(other than traffic violations or similar offences), written
Corporation policy or final cease-and-desist order, conviction
of a felony or of a misdemeanor involving moral turpitude,
unethical business practices in connection with the
Corporation's business, or misappropriation of the
Corporation's assets. The determination of "cause" shall be
made by the Committee and its determination shall be final and
conclusive.
(F) Notwithstanding the foregoing, the Committee
shall have authority, in its discretion, to extend the period
during which an Option may be exercised; provided that, in the
event that any such extension shall cause an Incentive Option
to be designated as a Nonqualified Option, no such extension
shall be made without the prior written request and consent of
the Participant.
(iv) Unless an individual option agreement provides otherwise,
an Option granted to a Participant who was an independent contractor or
director of the Corporation or a related corporation at the time of
grant (and who does not thereafter become an employee, in which case he
shall be subject to the provisions of Section 6(c)(iii) herein) may be
exercised only to the extent exercisable on the date of the
Participant's termination of service to the Corporation or a related
corporation (unless the termination was for cause), and must be
exercised, if at all, prior to the first to occur of the following, as
applicable: (X) the close of the period of 90 days next succeeding the
termination date; or (Y) the close of the Option Period. If the
services of such a Participant are terminated for cause (as defined in
Section 6(c)(iii)(E) herein), his Option shall lapse and no longer be
exercisable as of the effective time of his termination of services, as
determined by the Committee. Notwithstanding the foregoing, the
Committee may in its discretion accelerate the date for exercising all
or any part of an Option which was not otherwise exercisable on the
termination date or extend the period during which an Option may be
exercised, or both.
(v) A Participant or his legal representative, legatees or
distributees shall not be deemed to be the holder of any shares subject
to an Option unless and until certificates for such shares are
delivered to him or them under the Plan.
(vi) Nothing in the Plan shall confer upon the Participant any
right to continue in the service of the Corporation or a related
corporation as an employee, director, or independent contractor or to
interfere in any way with the right of the Corporation or a related
corporation to terminate the Participant's employment or service at any
time.
(vii) A certificate or certificates for shares of Common Stock
acquired upon exercise of an Option shall be issued in the name of the
Participant and distributed to the Participant (or his beneficiary) as
soon as practicable following receipt of notice of exercise and payment
of the purchase price.
(d) NONTRANSFERABILITY OF OPTIONS
(i) Options shall not be transferable other than by will, the
laws of intestate succession or pursuant to a qualified domestic
relations order. The designation of a beneficiary does not constitute a
<PAGE>
transfer. An Option shall be exercisable during the Participant's
lifetime only by him or by his guardian or legal representative.
(ii) If a Participant is subject to Section 16 of the Exchange
Act, shares of Common Stock acquired upon exercise of an Option may
not, without the consent of the Committee, be disposed of by the
Participant until the expiration of six months after the date the
Option was granted.
7. STOCK APPRECIATION RIGHTS
(a) GRANT OF SARS: Subject to the limitations of the Plan, the
Committee may in its sole and absolute discretion grant SARs to such eligible
individuals, in such numbers, upon such terms and at such times as the Committee
shall determine. SARs may be granted to an optionee of an Option (hereinafter
called a "related Option") with respect to all or a portion of the shares of
Common Stock subject to the related Option (a "Tandem SAR") or may be granted
separately to an eligible key employee (a "Freestanding SAR"). Subject to the
limitations of the Plan, SARs shall be exercisable in whole or in part upon
notice to the Corporation upon such terms and conditions as are provided in the
Agreement relating to the grant of the SAR.
(b) TANDEM SARS: A Tandem SAR may be granted either concurrently with
the grant of the related Option or (if the related Option is a Nonqualified
Option) at any time thereafter prior to the complete exercise, termination,
expiration or cancellation of such related Option. Tandem SARs shall be
exercisable only at the time and to the extent that the related Option is
exercisable (and may be subject to such additional limitations on exercisability
as the Committee may provide in the Agreement), and in no event after the
complete termination or full exercise of the related Option. For purposes of
determining the number of shares of Common Stock that remain subject to such
related Option and for purposes of determining the number of shares of Common
Stock in respect of which other Awards may be granted, upon the exercise of
Tandem SARs, the related Option shall be considered to have been surrendered to
the extent of the number of shares of Common Stock with respect to which such
Tandem SARs are exercised. Upon the exercise or termination of the related
Option, the Tandem SARs with respect thereto shall be canceled automatically to
the extent of the number of shares of Common Stock with respect to which the
related Option was so exercised or terminated. Subject to the limitations of the
Plan, upon the exercise of a Tandem SAR, the Participant shall be entitled to
receive from the Corporation, for each share of Common Stock with respect to
which the Tandem SAR is being exercised, consideration equal in value to the
excess of the fair market value of a share of Common Stock (as determined in
accordance with Section 6(b)(ii) herein) on the date of exercise over the
related Option Price per share; provided, that the Committee may, in any
Agreement granting Tandem SARs, establish a maximum value payable for such SARs.
(c) FREESTANDING SARS: The base price of a Freestanding SAR shall be
not less than 100% of the fair market value of the Common Stock (as determined
in accordance with Section 6(b)(ii) herein) on the date of grant of the
Freestanding SAR. Subject to the limitations of the Plan, upon the exercise of a
Freestanding SAR, the Participant shall be entitled to receive from the
Corporation, for each share of Common Stock with respect to which the
Freestanding SAR is being exercised, consideration equal in value to the excess
of the fair market value of a share of Common Stock on the date of exercise over
the base price per share of such Freestanding SAR; provided, that the Committee
may, in any Agreement granting Freestanding SARs, establish a maximum value
payable for such SARs.
(d) EXERCISE OF SARS:
(i) Subject to the terms of the Plan, SARs shall be
exercisable in whole or in part upon such terms and conditions as are
provided in the Agreement relating to the grant of the SAR. The period
during which an SAR may be exercisable shall not exceed ten years from
the date of grant or, in the case of Tandem SARs, such shorter Option
Period as may apply to the related Option. Any SAR or portion thereof
not exercised before expiration of the period stated in the Agreement
relating to the grant of the SAR shall terminate.
(ii) SARs may be exercised by giving written notice to the
Corporation at such place as the Committee shall direct. The date of
exercise of the SAR shall mean the date on which the Corporation shall
have received notice from the Participant of the exercise of such SAR.
<PAGE>
(iii) No SAR may be exercised unless the Participant is, at
the time of exercise, an eligible Participant, as described in Section
5, and has been a Participant continuously since the date the SAR was
granted, subject to the provisions of Section 6(c)(iii) and (iv)
herein.
(e) CONSIDERATION; ELECTION: The consideration to be received upon the
exercise of the SAR by the Participant shall be paid in cash, shares of Common
Stock (valued at fair market value on the date of exercise of such SAR in
accordance with Section 6(b)(ii) herein) or a combination of cash and shares of
Common Stock, as elected by the Participant, subject to the terms of the Plan
and the applicable Agreement. The Corporation's obligation arising upon the
exercise of the SAR may be paid currently or on a deferred basis with such
interest or earnings equivalent as the Committee may determine. A certificate or
certificates for shares of Common Stock acquired upon exercise of an SAR for
shares shall be issued in the name of the Participant (or his beneficiary) and
distributed to the Participant (or his beneficiary) as soon as practicable
following receipt of notice of exercise. No fractional shares of Common Stock
will be issuable upon exercise of the SAR and, unless otherwise provided in the
applicable Agreement, the Participant will receive cash in lieu of fractional
shares.
(f) LIMITATIONS: The applicable Agreement shall contain such terms,
conditions and limitations consistent with the Plan as may be specified by the
Committee. Unless otherwise so provided in the applicable Agreement or the Plan,
any such terms, conditions or limitations relating to a Tandem SAR shall not
restrict the exercisability of the related Option.
(g) NONTRANSFERABILITY:
(i) SARs shall not be transferable other than by will, the
laws of intestate succession or pursuant to a qualified domestic
relations order. The designation of a beneficiary does not constitute a
transfer. SARs may be exercised during the Participant's lifetime only
by him or by his guardian or legal representative.
(ii) If the Participant is subject to Section 16 of the
Exchange Act, shares of Common Stock acquired upon exercise of an SAR
may not, without the consent of the Committee, be disposed of by the
Participant until the expiration of six months after the date the SAR
was granted.
8. RESTRICTED AWARDS
(a) GRANT OF RESTRICTED AWARDS: Subject to the limitations of the Plan,
the Committee may in its sole and absolute discretion grant Restricted Awards to
such eligible individuals in such numbers, upon such terms and at such times as
the Committee shall determine. A Restricted Award may consist of a Restricted
Stock Award or a Restricted Unit, or both. Restricted Awards shall be payable in
cash or whole shares of Common Stock (including Restricted Stock), or partly in
cash and partly in whole shares of Common Stock, in accordance with the terms of
the Plan and the sole and absolute discretion of the Committee. The Committee
may condition the grant or vesting, or both, of a Restricted Award upon the
continued service of the Participant for a certain period of time, attainment of
such performance objectives as the Committee may determine, or upon a
combination of continued service and performance objectives. The Committee shall
determine the nature, length and starting date of the period during which the
Restricted Award may be earned (the "Restriction Period") for each Restricted
Award, which shall be as stated in the Agreement to which the Award relates. In
the case of Restricted Awards based upon performance criteria, or a combination
of performance criteria and continued service, the Committee shall determine the
performance objectives to be used in valuing Restricted Awards and determine the
extent to which such Awards have been earned. Performance objectives may vary
from participant to participant and between groups of participants and shall be
based upon such Corporation, business unit and/or individual performance factors
and criteria as the Committee in its sole discretion may deem appropriate,
including, but not limited to, earnings per share, return on equity, return on
assets or total return to shareholders. The Committee shall determine the terms
and conditions of each Restricted Award, including the form and terms of payment
of Awards. The Committee shall have sole authority to determine whether and to
what degree Restricted Awards have been earned and are payable and to interpret
the terms and conditions of Restricted Awards and the provisions herein.
(b) EARNING OF RESTRICTED AWARDS: Unless the applicable Agreement
provides otherwise, a Restricted Award granted to a Participant shall be deemed
to be earned as of the first to occur of the completion of the
<PAGE>
Restriction Period, retirement, displacement, death or disability of the
Participant, or acceleration of the Restricted Award, provided that, in the case
of Restricted Awards based upon performance criteria or a combination of
performance criteria and continued service, the Committee shall have sole
discretion to determine if, and to what degree, the Restricted Awards shall be
deemed earned at the end of the Restriction Period or upon the retirement,
displacement, death or disability of the Participant. In addition, the following
rules shall also apply to the earning of Restricted Awards:
(i) COMPLETION OF RESTRICTION PERIOD: For this purpose, a
Restricted Award shall be deemed to be earned upon completion of the
Restriction Period (except as otherwise provided herein for
performance- based Restricted Awards). In order for a Restricted Award
to be deemed earned, the Participant must have been continuously
employed or in service during the Restriction Period. Continuous
employment or service shall mean employment with or service to any
combination of the Corporation and one or more related corporations,
and a temporary leave of absence with consent of the Corporation shall
not be deemed to be a break in continuous employment or service.
(ii) RETIREMENT OF THE PARTICIPANT: For this purpose, the
Participant shall be deemed to have retired as of the earlier of (A)
his normal retirement date under the retirement plan established by the
Corporation for its employees which is applicable to the Participant,
or (B) his retirement date under a contract, if any, between the
Participant and the Corporation providing for his retirement from the
employment of the Corporation or a related corporation prior to such
normal retirement date, or (C) a mutually agreed upon early retirement
date under such retirement plan of the Corporation between the
Participant and the Corporation.
(iii) DISPLACEMENT OF THE PARTICIPANT: For this purpose, the
Participant shall be deemed to have been displaced in the event of the
termination of the Participant's employment or service due to the
elimination of the Participant's job or position without fault on the
part of the Participant.
(iv) DEATH OR DISABILITY OF THE PARTICIPANT: Except as
otherwise provided herein for performance-based Restricted Awards, if
the Participant shall terminate continuous employment or service
because of death or disability before a Restricted Award is otherwise
deemed to be earned pursuant to this Section 8(b), the Participant
shall be deemed to have earned a percentage of the Award (rounded to
the nearest whole share in the case of Restricted Awards payable in
shares) determined by dividing the number of his full years of
continuous employment or service then completed during the Restriction
Period with respect to the Award by the number of years of such
Restriction Period.
(v) ACCELERATION OF RESTRICTED AWARDS BY THE COMMITTEE:
Notwithstanding the provisions of this Section 8(b), in the event of
the termination of employment or service of a Participant for reasons
other than retirement, displacement, death or disability, the
Committee, in its sole and absolute discretion, may accelerate the date
that any Restricted Award granted to the Participant shall be deemed to
be earned in whole or in part, without any obligation to accelerate
such date with respect to other Restricted Awards granted to the
Participant or to accelerate such date with respect to Restricted
Awards granted to any other Participant, or to treat all Participants
similarly situated in the same manner.
(c) FORFEITURE OF RESTRICTED AWARDS: If the employment or service of a
Participant shall be terminated for any reason, and the Participant has not
earned all or part of a Restricted Award pursuant to the terms herein, such
Award to the extent not then earned shall be forfeited immediately upon such
termination and the Participant shall have no further rights with respect
thereto.
(d) DIVIDEND AND VOTING RIGHTS; SHARE CERTIFICATES: A Participant shall
have no dividend rights or voting rights with respect to shares reserved in his
name pursuant to a Restricted Award payable in shares but not yet earned
pursuant to Section 8(b). A certificate or certificates for shares of Common
Stock representing a Restricted Award payable in shares shall be issued in the
name of the Participant and distributed to the Participant (or his beneficiary)
as soon as practicable following the date that the shares subject to the Award
are earned as provided in Section 8(b). No certificate shall be issued hereunder
in the name of the Participant (or his beneficiary) except to the extent the
shares represented thereby have been earned.
<PAGE>
(e) NONTRANSFERABILITY:
(i) The recipient of a Restricted Award shall not sell,
transfer, assign, pledge or otherwise encumber shares subject to the
Award until the Restriction Period has expired or until all conditions
to vesting have been met.
(ii) Restricted Awards shall not be transferable other than by
will, the laws of intestate succession or pursuant to a qualified
domestic relations order. The designation of a beneficiary does not
constitute a transfer.
(iii) If a Participant of a Restricted Award is subject to
Section 16 of the Exchange Act, shares of Common Stock subject to such
Award may not, without the consent of the Committee, be sold or
otherwise disposed of within six months following the date of grant of
such Award.
9. WITHHOLDING
The Corporation shall withhold all required local, state and federal
taxes from any amount payable in cash with respect to an Award. The Corporation
shall require any recipient of an Award payable in shares of the Common Stock to
pay to the Corporation in cash the amount of any tax or other amount required by
any governmental authority to be withheld and paid over by the Corporation to
such authority for the account of such recipient. Notwithstanding the foregoing,
the recipient may satisfy such obligation in whole or in part, and any other
local, state or federal income tax obligations relating to such an Award, by
electing (the "Election") to have the Corporation withhold shares of Common
Stock from the shares to which the recipient is entitled. The number of shares
to be withheld shall have a fair market value (determined in accordance with
Section 6(b)(ii)) as of the date that the amount of tax to be withheld is
determined (the "Tax Date") as nearly equal as possible to (but not exceeding)
the amount of such obligations being satisfied. Each Election must be made in
writing to the Committee prior to the Tax Date.
10. PERFORMANCE-BASED COMPENSATION
It is the general intent of the Corporation that Awards conferred under
the Plan to Covered Employees, as such term is defined in Section 14(b) herein,
shall comply with the qualified performance-based compensation exception to
employer compensation deductions set forth in Section 162(m) of the Code, and
the Plan generally shall be construed in favor of meeting the requirements of
Section 162(m) of the Code and the regulations thereunder to the extent
possible.
11. SECTION 16(B) COMPLIANCE
It is the intention of the Corporation that the Plan shall comply in
all respects with Rule 16b-3 under the Exchange Act, and, if any Plan provision
is later found not to be in compliance with Section 16 of the Exchange Act, the
provision shall be deemed null and void, and in all events the Plan shall be
construed in favor of it meeting the requirements of Rule 16b-3. Notwithstanding
anything in the Plan to the contrary, the Committee, in its sole and absolute
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to participants who are officers or directors
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other participants.
12. NO RIGHT OR OBLIGATION OF CONTINUED EMPLOYMENT
Nothing contained in the Plan shall require the Corporation or a
related corporation to continue the employment or service of a Participant, nor
shall any such individual be required to remain in the employment or service of
the Corporation or a related corporation. Except as otherwise provided in the
Plan, Awards granted under the Plan to employees of the Corporation shall not be
affected by any change in the duties or position of the participant, as long as
such individual remains an employee of, or in service to, the Corporation or a
related corporation.
<PAGE>
13. RETIREMENT PLANS
In no event shall any amounts accrued, distributable or payable under
the Plan be treated as compensation for the purpose of determining the amount of
contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related corporation that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
14. CERTAIN DEFINITIONS
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Agreement" means any written agreement or agreements between the
Corporation and the recipient of an Award pursuant to the Plan relating to the
terms, conditions and restrictions of Options, SARs, Restricted Awards and any
other Awards conferred herein.
(b) "Covered employee" shall have the meaning given the term in Section
162(m) of the Code or the regulations thereunder.
(c) "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or can
be expected to last for a continuous period of not less than twelve months.
(d) "Parent" or "parent corporation" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock possessing
50% or more of the total combined voting power of all classes of stock in
another corporation in the chain.
(e) "Predecessor" or "predecessor corporation" means a corporation
which was a party to a transaction described in Section 424(a) of the Code (or
which would be so described if a substitution or assumption under that Section
had occurred) with the Corporation, or a corporation which is a parent or
subsidiary of the Corporation, or a predecessor of any such corporation.
(f) "Related corporation" means any parent, subsidiary or predecessor
of the Corporation.
(g) "Restricted Stock" shall mean shares of Common Stock which are
subject to Restricted Awards payable in shares, the vesting of which is subject
to restrictions set forth in the Plan or the Agreement relating to such Award.
(h) "Subsidiary" or "subsidiary corporation" means any corporation
(other than the Corporation) in an unbroken chain of corporations beginning with
the Corporation if each corporation other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in another corporation in the chain.
15. AMENDMENT AND TERMINATION OF THE PLAN
The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation; provided, that such amendment or termination shall
not, without the consent of the recipient of an Award, adversely affect the
rights of the recipient with respect to an outstanding Award; and provided
further, that approval by the shareholders of the Corporation shall be required
for any amendment which would (i) increase the number of shares of Common Stock
which may be issued under the Plan, except to the extent of adjustments pursuant
to Section 4; or (ii) materially change the requirements for eligibility to be a
recipient of an Award, unless shareholder approval of any such amendments is not
required by applicable law, rule or regulation.
<PAGE>
16. RESTRICTIONS ON SHARES
The Committee may impose such restrictions on any shares representing
Awards hereunder as it may deem advisable, including without limitation
restrictions under the Securities Act, under the requirements of any stock
exchange or similar organization and under any blue sky or state securities laws
applicable to such shares. The Corporation may cause a restrictive legend to be
placed on any certificate issued pursuant to an Award hereunder in such form as
may be prescribed from time to time by applicable laws and regulations or as may
be advised by legal counsel.
17. APPLICABLE LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of North Carolina.
18. SHAREHOLDER APPROVAL
The Plan is subject to approval by the shareholders of the Corporation,
which approval must occur, if at all, within 12 months of the effective date of
the Plan. Awards granted prior to such shareholder approval shall be conditioned
upon and shall be effective only upon approval of the Plan by such shareholders
on or before such date.
19. CHANGE OF CONTROL
(a) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change of Control (as defined in Section 19(b) herein):
(i) All Options and SARs outstanding as of the date of such
Change of Control shall become fully exercisable, whether or not then
otherwise exercisable.
(ii) Any restrictions including but not limited to the
Restriction Period applicable to any Restricted Award shall be deemed
to have expired, and such Restricted Awards shall become fully vested
and payable to the fullest extent of the original grant of the
applicable Award.
(iii) Notwithstanding the foregoing, in the event of a merger,
share exchange, reorganization or other business combination affecting
the Corporation or a related corporation, the Committee may, in its
sole and absolute discretion, determine that any or all Awards granted
pursuant to the Plan shall not vest or become exercisable on an
accelerated basis, if the Board of Directors of the surviving or
acquiring corporation, as the case may be, shall have taken such
action, including but not limited to the assumption of Awards granted
under the Plan or the grant of substitute awards (in either case, with
substantially similar terms as Awards granted under the Plan), as in
the opinion of the Committee is equitable or appropriate to protect the
rights and interests of participants under the Plan. For the purposes
herein, the Committee authorized to make the determinations provided
for in this Section 19(a)(iii) shall be appointed by the Board of
Directors, two-thirds of the members of which shall have been directors
of the Corporation prior to the merger, share exchange, reorganization
or other business combinations affecting the Corporation or a related
corporation.
(b) For the purposes herein, a "Change of Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any person or group of persons (as defined in
Section 13(d) and 14(d) of the Exchange Act) together with its
affiliates, excluding employee benefit plans of Corporation, becomes,
directly or indirectly, the "beneficial owner" (as defined in Rule
13d-3 promulgated under the Exchange Act) of securities of the
Corporation representing 20% or more of the combined voting power of
the Corporation's then outstanding securities;
(ii) The date upon which, as a result of a tender offer or
exchange offer for the purchase of securities of Corporation (other
than such an offer by the Corporation for its own securities), or as a
result of a proxy contest, merger, consolidation or sale of assets, or
as a result of any combination of the
<PAGE>
foregoing, individuals who at the beginning of any year period during
such term constitute the Corporation's Board of Directors, plus new
directors whose election by the Corporation's shareholders is approved
by a vote of at least two-thirds of the outstanding voting shares of
the Corporation, cease for any reason during such year period to
constitute at least two-thirds of the members of such Board of
Directors;
(iii) The date the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation
or entity regardless of which entity is the survivor, other than a
merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into
voting securities of the surviving entity) at least 60% of the combined
voting power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation;
(iv) The date the shareholders of the Corporation approve a
plan of complete liquidation or winding-up of the Corporation or an
agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets; or
(v) The occurrence of any other event which the Corporation's
Board of Directors determines should constitute a Change of Control.
IN WITNESS WHEREOF, this 1997 Omnibus Stock Plan of C3, Inc., is, by
the authority of the Board of Directors of the Corporation, executed in behalf
of the Corporation, the 25th day of September, 1997.
C3, INC.
By: /s/ Jeff N. Hunter
---------------------
Jeff N. Hunter
President
ATTEST:
/s/ Mark W. Hahn
- ------------------------
Mark W. Hahn, Secretary
[Corporate Seal]
<PAGE>
1998 DECLARATION OF AMENDMENT TO
1997 OMNIBUS STOCK PLAN
OF C3, INC.
THIS DECLARATION OF AMENDMENT, made this 22nd day of November,
1998, by C3, INC., a North Carolina corporation (the "Corporation"), to the 1997
Omnibus Stock Plan of C3, Inc. (the "Plan");
R E C I T A L S:
It is deemed advisable to amend the Plan to alter the
permissible methods of payment of the option price upon exercise by deleting the
reference in Section 6(c)(ii) to payment by withholding of shares of the
Corporation's common stock, except in the event of a "change of control" (as
defined in the Plan) of the Corporation.
NOW, THEREFORE, IT IS DECLARED that the Plan shall be and
hereby is amended, effective with respect to all outstanding options, provided
that the consent of the optionee is obtained, and all subsequent options which
may be granted on or after the date hereof, by deleting Section 6(c)(ii) of the
Plan and inserting therefor the following:
"(ii) An Option may be exercised by giving written notice to the
Corporation at such place as the Corporation shall direct.
Such notice shall specify the number of shares to be purchased
pursuant to an Option and the aggregate purchase price to be
paid therefor, and shall be accompanied by the payment of such
purchase price. Such payment shall be in the form of (A) cash;
(B) shares of Common Stock owned by the Participant at the
time of exercise; (C) delivery of written notice of exercise
to the Corporation and delivery to a broker of written notice
of exercise and irrevocable instructions to promptly deliver
to the Corporation the amount of sale or loan proceeds to pay
the Option Price; or (D) a combination of the foregoing
methods, as elected by the Participant. Notwithstanding the
foregoing, in the event of a "change of control" of the
Corporation (as such term is defined in Section 19(b) herein),
then, in addition to the foregoing methods of exercise,
payment may also be made by the withholding of shares of
Common Stock otherwise deliverable upon exercise. Shares
tendered or withheld in payment on the exercise of an Option
shall be valued at their fair market value on the date of
exercise, as determined by the Committee by applying the
provisions of Section 6(b)(ii)."
IN WITNESS WHEREOF, this Declaration of Amendment is executed
on behalf of C3, Inc. as the day and year first above written.
C3, INC.
By: /Robert S. Thomas/
----------------------
Robert S. Thomas
President
ATTEST:
/Mark W. Hahn/
- ----------------------
Mark W. Hahn
Secretary
[Corporate Seal]
