<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED APRIL 4, 1998
Hayes Corporation
A Delaware Corporation
IRS Employer Identification No. 52-1987873
5854 Peachtree Corners East, Norcross, GA 30092
Telephone - (770) 840-9200
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Common Stock, par value $.01 per share
The Company had 19,984,904 shares of its Common Stock outstanding on April 4,
1998.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
HAYES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
April 4, January 3,
1998 1998
--------- ---------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,075 $ 15,240
Restricted cash 50 530
Accounts receivable, less allowance for doubtful
accounts and product returns of $5,999 and $4,241 37,094 36,706
Receivables from related parties 1,948 2,705
Inventories, net 38,080 32,250
Prepaid expenses and other current assets 2,964 1,890
--------- ---------
Total current assets 84,211 89,321
Property and equipment, net 9,049 9,436
Computer software costs, net 958 623
Intangibles and other long-term assets, net 14,637 15,948
--------- ---------
TOTAL ASSETS $ 108,855 $ 115,328
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current debt $ 13,121 $ 11,363
Accounts payable 18,764 23,462
Amounts due to related parties 11,626 15,029
Accrued liabilities 27,134 30,561
Income taxes payable 321 295
--------- ---------
Total current liabilities 70,966 80,710
Long-term debt, less current 7,736 580
--------- ---------
TOTAL LIABILITIES 78,702 81,290
Redeemable preferred stock, series A, no par value,
authorized, issued and outstanding 1,217,931 shares 5,455 5,455
6% cumulative preferred stock 44,444 47,459
STOCKHOLDERS' DEFICIT
Common Stock, $.01 par value; authorized 100,000,000
shares; issued and outstanding 19,984,904 and
19,497,882 shares 198 193
Paid-in capital 94,727 92,279
Accumulated deficit (114,779) (111,401)
Accumulated other comprehensive income 108 53
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (19,746) (18,876)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 108,855 $ 115,328
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
HAYES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
April 4, March 31,
--------- ---------
1998 1997
--------- ---------
<S> <C> <C>
Net sales $ 44,172 $ 39,176
Cost of sales 33,043 29,219
--------- ---------
Gross profit 11,129 9,957
--------- ---------
Operating expenses:
Sales and marketing 7,255 7,859
General and administrative 3,183 4,332
Research and development 3,558 2,922
--------- ---------
Total operating expense 13,996 15,113
--------- ---------
Operating loss (2,867) (5,156)
Interest expense, net 459 1,023
Other income (expense), net (26) 832
--------- ---------
Loss before income tax expense (3,352) (5,347)
Income tax expense 26 12
--------- ---------
Net loss $ (3,378) $ (5,359)
--------- ---------
Preferred stock dividend 638 --
--------- ---------
Loss applicable to common shareholders $ (4,016) $ (5,359)
Basic and diluted loss per common share $ (.20) $ (.69)
========= =========
Weighted average number of common shares outstanding 19,743 7,701
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
HAYES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
April 4, March 31,
-------- --------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,378) $ (5,359)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,388 1,964
Other (92) 493
Changes in assets and liabilities:
Accounts receivable 296 (5,572)
Inventories (5,665) (9,098)
Prepaid expenses and other current assets (1,969) 144
Accounts payable (4,698) 1,832
Amounts due to related parties (3,403) 2,932
Accrued liabilities (3,425) (1,926)
Income taxes payable 26 1,527
Other long-term liabilities -- (1,463)
-------- --------
Total adjustments (16,542) (9,167)
-------- --------
Net cash used in operating activities (19,920) (14,526)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (638) (1,285)
Other 564 337
-------- --------
Net cash used in investing activities (74) (948)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt (4,745) (397)
Proceeds from debt 13,659 8,300
Issuance of convertible notes -- 4,000
Other (140) 263
-------- --------
Net cash provided by financing activities 8,774 12,166
-------- --------
Effect of exchange rate changes on cash 55 (383)
-------- --------
Net decrease in cash and cash equivalents (11,165) (3,691)
Cash and cash equivalents at beginning of period 15,240 5,687
-------- --------
Cash and cash equivalents at end of period $ 4,075 $ 1,996
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
HAYES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months
ended April 4, 1998
(unaudited)
1. General
On December 30, 1997, Hayes Corporation (the "Company" or "Hayes"),
formerly known as Access Beyond, Inc. ("Access Beyond"), completed a reverse
triangular merger (the "Merger") with Hayes Microcomputer Products, Inc.("Hayes
Microcomputer"). In the Merger, the Company issued 15,261,763 shares of Common
Stock and 1,217,931 shares of Series A Preferred Stock, after giving effect to a
one for three reverse stock split effected February 25, 1998 (the "reverse stock
split"). The stock issued in the transaction represented 79% of the outstanding
stock immediately after the Merger excluding the effect of warrants, stock
options and the 6% Cumulative Convertible Preferred Stock. Immediately following
the Merger, the Company changed its name to Hayes Corporation. Since the Hayes
Microcomputer shareholders received a substantial majority of the shares of
stock of the Company, the transaction is treated as a reverse acquisition of the
Company by Hayes Microcomputer for accounting purposes. As a result, the
historical financial statements of the surviving company for the periods prior
to the Merger are those of Hayes Microcomputer rather than those of Access
Beyond.
The accompanying condensed consolidated financial statements, should be
read in conjunction with Form 10-K of Hayes Corporation and its wholly-owned
subsidiaries for the year ended January 3, 1998. The accompanying condensed
consolidated financial statements reflect all adjustments which are in the
opinion of management, necessary for a fair presentation of the Company's
consolidated financial position as of April 4, 1998 and the results of
operations for the three months ended April 4, 1998 and March 31, 1997. The
results of operations for such periods, however, are not necessarily indicative
of the results to be expected for a full fiscal year.
Certain reclassifications have been made to prior period consolidated
financial statements to conform to the April 4, 1998 presentation.
2. Inventories
Inventories, net of reserves, consist of (in thousands):
<TABLE>
<CAPTION>
April 4, January 3,
1998 1998
---------- ----------
<S> <C> <C>
Raw materials $ 12,940 $ 12,047
Work in process 4,176 5,205
Finished goods 20,964 14,998
---------- ----------
$ 38,080 $ 32,250
========== ==========
</TABLE>
3. Acquisitions
(a) Cardinal Technologies, Inc.
During April 1997, the Company acquired 100% of the outstanding common
stock of Cardinal, a private manufacturer of modems and ISDN adapters, for $2.5
million. The acquisition has been accounted for utilizing the purchase method of
accounting. The estimated fair values assigned to the assets and liabilities
acquired were as follows (in thousands):
<TABLE>
<S> <C>
Total consideration paid (including acquisition costs of $595) $ 3,095
Fair value of tangible and identifiable assets acquired (15,350)
Fair value of liabilities assumed 17,055
--------
Goodwill $ 4,800
========
</TABLE>
5
<PAGE> 6
Pro forma results of operations of Cardinal from the beginning of the
period through the acquisition date are not presented as they are not
significant to the Company's consolidated results of operations.
(b) Access Beyond, Inc.
The estimated fair values assigned to assets and liabilities acquired
in the Merger were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Fair value of stock issued $ 62,255
Other acquisition costs 1,550
Fair value of liabilities assumed 14,808
Fair value of tangible and identifiable assets acquired (13,622)
Acquired product line technology (4,772)
Acquired in-process research and development (54,990)
---------
Goodwill $ 5,229
=========
</TABLE>
Approximately $55.0 million of the total purchase price represented the
value of in-process research and development based on an appraisal of the
product line technology that had not yet reached technological feasibility and
had no alternative future use. The amount was determined using the income
forecast method and was charged to the Company's operations in the fourth
quarter of 1997.
The following pro forma results of operations have been prepared as
though the Merger had occurred as of the beginning of the period presented. The
pro forma information does not purport to be indicative of the results of
operations that would have been attained had the Merger been in effect on the
date indicated, nor of future results of operations of the Company.
<TABLE>
<CAPTION>
Three months ended
March 31,
1997
---------
<S> <C>
(In thousands, except per share data)
Statement of operations data:
Net revenues $ 43,262
Net loss (7,401)
Loss per share (0.96)
</TABLE>
4. Proposed Restructuring Terms With 6% Preferred Shareholders
The Company announced on April 17, 1998 that it had reached an
agreement with its 6% Convertible Preferred Shareholders on a proposed
restructuring of the terms of the 6% Convertible Preferred Stock. Under the
proposed revised terms, the outstanding 6% Convertible Preferred Stock would
immediately convert into a new preferred convertible instrument, featuring a
fixed conversion price of $9.00 and a dividend rate of 8%, payable in cash or as
a PIK. At the end of 1998, to the extent that a preferred balance remained, the
instrument would convert into a subordinated convertible debenture with an
interest rate of 14%, maturing on January 2, 2000. At any time during the term
of the convertible preferred or the convertible debenture, the Company would
have the right, upon prior notice, to redeem at face value plus any accrued
interest, any or all of the outstanding principal in either instrument.
The Company has also agreed to expand its Board of Directors to include
two additional outside Directors and to allow the shareholders of the 6%
Convertible Preferred Stock to propose the candidates for such positions. Such
candidates must be independent of the shareholders. The Company will have the
right to reasonably approve all such candidates before their election to the
Board of Directors.
As a result of the step-up in principal value, the Company expects to
recognize a dividend of approximately $8 million upon the completion of the
restructuring of the outstanding 6% Convertible Preferred Stock.
6
<PAGE> 7
During the period of final negotiation, the Company has voluntarily
agreed to suspend action in a lawsuit that it filed against the Preferred
Shareholders without prejudicing the parties' rights. If a final resolution is
not achieved, the Company will aggressively seek to enforce its rights through
the lawsuit.
While all parties have agreed to the proposed restructuring, there can
be no assurance that the modifications to the terms of the 6% Convertible
Preferred Stock will be successfully concluded.
5. Net Loss Per Common Share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" ("FAS 128"). This statement establishes
standards for computing and presenting earnings per share ("EPS"). Basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. FAS 128 requires restatement of all prior-period
EPS data presented.
Potential common stock equivalents such as stock options and warrants
have an anti-dillutive effect on net loss per common share calculations for the
three months ended April 4, 1998 and March 31, 1997.
6. Comprehensive Income
During the first quarter of 1998, the Company adopted the provisions of
FAS No. 130, "Reporting Comprehensive Income." The standard requires that
entities include within their financial statements information on comprehensive
income, which is defined as all activity impacting equity from nonowner sources.
For the Company, comprehensive income is comprised exclusively of changes in
cumulative exchange rate adjustments. Other comprehensive gain for the three
months ended April 4, 1998 is $0.1 million and other comprehensive loss for the
three months ended March 31, 1997 is $0.4 million.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FORWARD LOOKING STATEMENTS
Portions of this Form 10-Q report contain "forward looking" statements
that involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward looking statements.
Although the Company believes that the assumptions underlying the forward
looking statements contained herein are reasonable, any of the assumptions could
prove inaccurate, and therefore, there can be no assurance that the forward
looking statements included herein will prove to be accurate. Factors that might
cause such a difference include, but are not limited to, market acceptance of
the Company's'products and services.
BUSINESS UNITS
Hayes is comprised of three business units: the Modem Products
business, the Access Systems business and the Broadband Products business. The
Modem Products business designs, manufactures and markets analog and ISDN modem
products. The Modem Products business distributes its products under the Optima,
Accura, Practical Peripherals and Cardinal brands. The Access Systems business
designs and markets modem pool and remote access server products. These products
are distributed under the Century brand. The Broadband Products business designs
and markets ADSL and cable modem products and was formed in June 1997. The
Broadband Products business markets its products under the Ultra brand.
7
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
General. Hayes' primary capital requirements are for working capital,
acquisitions and other capital expenditures. Hayes has historically met its
capital requirements through a combination of equity transactions, cash flow
from operations, bank lines of credit and credit terms from suppliers.
Cash Flows. Cash and cash equivalents decreased by approximately $11.1
million to $4.1 million at April 4, 1998 as compared to $15.2 million at January
3, 1998. The decrease in cash primarily resulted from the pay down of accounts
payable and increase in inventory.
Cash used in operations was $19.9 million and $14.5 million for the
three months ended April 4, 1998 and March 31, 1997, respectively. The increase
in cash usage for the three months ended April 4, 1998 is due to the pay down of
accounts payable and other accrued liabilities partially offset by a smaller
increase in inventories and a lower net loss as compared to the three months
ended March 31, 1997.
Cash used in investing activities was $0.1 million and $0.9 million for
the three months ended April 4, 1998 and March 31, 1997, respectively. The
decrease in cash usage is primarily attributable to decreased spending on
capital items.
On February 20, 1998, the Company entered into a new credit facility
with the Commercial Funding Division of NationsCredit ("NationsCredit"). The
NationsCredit facility consists of two term loans and a revolving loan which
provide for maximum borrowing of $42.5 million. The revolving loan provides for
financing based upon eligible receivables and inventory. The term loans are
based upon appraised values of equipment and intangibles. The term loans and the
revolving loans bear interest at prime plus 0.75%. The NationsCredit facility
replaced a credit facility provided by The CIT Group/Credit Finance, Inc. (the
"CIT Facility").
Cash provided by financing activities was $8.8 million and $12.2
million for the three months ended April 4, 1998 and March 31, 1997,
respectively. The cash provided by financing activities for the first quarter
1998 is primarily related to the new NationsCredit facility. The cash provided
by financing for the first quarter 1997 is primarily related to the CIT Facility
and issuance of convertible notes.
Management believes that it will be required to reduce its investment
in working capital during the Company's second and third quarters and that the
cash effect of such reduction along with its cash and cash equivalents and
credit facilities will be sufficient to satisfy operating cash and capital
expenditure requirements for at least the next twelve months.
8
<PAGE> 9
INFLATION
Hayes believes that inflation has not had a material impact on its
operating results and does not expect inflation to have a material impact on its
operating results in the foreseeable future.
RESULTS OF OPERATIONS
NET SALES
<TABLE>
<CAPTION>
April 4, As a % March 31, As a %
1998 of revenue 1997 of revenue Change
-------- ---------- --------- ---------- ------
<S> <C> <C> <C> <C> <C>
Modem Products $ 40,817 92.4% $ 37,688 96.2% $3,129
Access Systems 3,343 7.5% 1,488 3.8% 1,855
Broadband 12 0.1% -- -- 12
-------- ---------- --------- ---------- ------
$ 44,172 100.0% $ 39,176 100.0% $4,996
======== ========== ========= ========== ======
</TABLE>
Net sales for the three months ended April 4, 1998 increased by $5.0
million, or 12.8%, from the same period in 1997. The quarter to quarter revenue
increase is attributed to expanding sales in new OEM channels and newly
available access systems products.
GROSS PROFIT
<TABLE>
<CAPTION>
April 4, As a % March 31, As a %
1998 of revenue 1997 of revenue Change
-------- ---------- --------- ---------- ------
<S> <C> <C> <C> <C> <C>
Gross profit $11,129 25.2% $ 9,957 25.4% $1,172
======== ========== ========= ========== ======
</TABLE>
Gross profit as a percentage of net revenues declined to 25.2% in the
first quarter of 1998 as compared to 25.4% in the first quarter of 1997
resulting from margin compression in the Asia Pacific region which more than
offset improved margins resulting from increased access systems sales.
OPERATING EXPENSES
<TABLE>
<CAPTION>
April 4, As a % March 31, As a %
1998 of revenue 1997 of revenue Change
-------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales and marketing $ 7,255 $ 7,859 $ (604)
General & administrative 3,183 4,332 (1,149)
Research & development 3,558 2,922 636
-------- --------- -------
$ 13,996 31.7% $ 15,113 38.6% $(1,117)
======== ========== ========= ========== =======
</TABLE>
Selling, general and administrative expenses decreased by $1.8 million
in the first quarter of 1998 from the comparable period in 1997. This decrease
is the result of the Company's ongoing strategy targeted at reducing operating
expenses and improving operating efficiencies.
Research and development expenses increased by $0.6 million in the
first quarter of 1998 from the comparable period in 1997. This increase is due
to investments by the Company in product and business development for its access
systems and broadband businesses partially offset by lower spending in its modem
products business.
9
<PAGE> 10
OPERATING LOSS
<TABLE>
<CAPTION>
April 4, As a % March 31, As a %
1998 of revenue 1997 of revenue Change
------- ----------- -------- ----------- ------
<S> <C> <C> <C> <C> <C>
Operating loss $(2,867) (6.5)% $ (5,156) (13.2)% $2,289
</TABLE>
Operating loss for the quarter ended April 4, 1998 decreased by $2.3
million as compared to the quarter ended March 31, 1997. This decrease is due to
increased revenue and improved operating efficiencies.
MISCELLANEOUS
<TABLE>
<CAPTION>
April 4 As a % March 31, As a %
1998 of revenue 1997 of revenue Change
------- ----------- -------- ----------- ------
<S> <C> <C> <C> <C> <C>
Interest expense, net $ 459 1.0% $ 1,023 2.6% $ (564)
Other income (expense) (26) (0.1)% 832 2.1% (858)
Income tax expense 26 0.1% 12 0.1% 14
</TABLE>
Interest expense for the first quarter of 1998 decreased $0.6 million
compared to the first quarter of 1997. This is primarily due to the lower
interest rate on the Company's new credit facility with NationsCredit and lower
average borrowings.
NET LOSS
<TABLE>
<CAPTION>
April 4, As a % March 31, As a %
1998 of revenue 1997 of revenue Change
------- ----------- -------- ----------- ------
<S> <C> <C> <C> <C> <C>
Net loss $(3,378) (7.6)% $ (5,359) (13.7)% $1,981
</TABLE>
Net loss decreased by $2.0 million for the three months ended April 4,
1998 as compared to the three months ended March 31, 1997. This decrease is due
to increased sales and improved operating efficiencies.
Hayes reported a net loss applicable to common shareholders of $4.0
million for the three month period ended April 4, 1998 as compared to $5.4
million for the similar period in 1997. The net loss applicable to common
shareholders includes a preferred stock dividend of $0.6 million for the first
quarter of 1998. On a per share basis the net loss was $(0.20) and $(0.69) for
the first quarter of 1998 and 1997, respectively.
Year 2000
The Company has assessed the impact of the year 2000 issue and believes
that the costs to upgrade its information and operating systems to address this
issue are not material. In 1997, the Company commenced efforts to replace its
information systems with software from Oracle Corporation which is Year 2000
compliant. These efforts are expected to be completed in fiscal 1998.
10
<PAGE> 11
NEW DEVELOPMENTS
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On April 3, 1998, the Company filed a Complaint for breach of
implied covenant of good faith and fair dealing, breach of warranty,
breach of fiduciary duty and tortious misappropriation of a corporate
asset in the Supreme Court of the State of New York, County of New
York, against the Company's 6% Cumulative Convertible Preferred
Stockholders and their investment managers, which include Elliot
Associates, L.P., Westgate International, L.P., Montrose Investments
Ltd., Westover Investments, L.P., Stark International, Shepherd
Investments International, Ltd., Ramius Fund, Ltd., GAM Arbitrage
Investments, Inc., Leonardo, L.P., Raphael, L.P., AG Super Fund
International Partners, L.P., Stonington Management Corporation, Staro
Asset Management and Angelo, Gordon & Co., L.P. In the Complaint, the
Company claims damages from the Defendants, jointly and severally, in
an amount in the millions of dollars to be determined at trial, plus
punitive damages. The litigation arises out of conduct by the
Defendants following entry into a Preferred Stock Investment Agreement
with certain of the Defendants pursuant to which such Defendants
purchased the Company's 6% Cumulative Convertible Preferred Stock from
the Company. Settlement negotiations are currently under way; however,
there is no assurance that such negotiations will be successful.
Item 2. Changes in Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On February 25, 1998, the Company held a special meeting of
its stockholders to approve an amendment to its Certificate of
Incorporation to effect a one-for-three reverse split of the Company's
common stock. The amendment was approved by the stockholders with
13,686,644 shares voting to approve the amendment, 38,706 shares voting
against the amendment and with 8,500 shares abstaining.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
3.1* Amended and Restated Certificate of Incorporation of the Company (filed
as Exhibit 3.2 to the Company's Form 10-K for the year ended January 3,
1998).
3.2* Amended and Restated Bylaws of the Company (filed as Exhibit 3.3 to the
Company's Form 10-K for the year ended January 3, 1998).
4.1* Specimen Common Stock Certificate (filed as Exhibit 4.6.1 to the
Company's registration statement on Form S-4, as amended (Commission
File Number 333-37993)).
11
<PAGE> 12
4.2* Specimen Series A Stock Certificate (filed as Exhibit 4.6.2 to the
Company's registration statement on Form S-4, as amended (Commission
File Number 333-37993)).
10.1* Technology License Agreement, dated as of November 16, 1996 between
Penril and the Company (filed as Exhibit 10.1 to the Company's
registration statement on Form S-1, as amended (Commission File Number
333-10741)).
10.2* Development and License Agreement dated as of June 16, 1996 between Bay
and Penril, on behalf of the Company (filed as Exhibit 10.2 to the
Company's registration statement on Form S-1, as amended (Commission
File Number 333-10741)).
10.3* Indemnification Agreement dated as of November 16, 1996 between Penril
and the Company (filed as Exhibit 10.3 to the Company's registration
statement on Form S-1, as amended (Commission File Number 333-10741)).
10.4* Transitional Services Agreement dated as of November 16, 1996 between
the Company and Penril (filed as Exhibit 10.7 to the Company's
registration statement on Form S-1, as amended (Commission File Number
333-10741)).
10.5.1* Lease Agreement between Penril and Real Estate Income Partners dated as
of March 31, 1989, as amended on May 14, 1990 and November 15, 1996
(filed as Exhibit 10.8.1 to the Company's Form 10-K filed October 16,
1997).
10.5.2* Assignment and Assumption of Lease between Penril and the Company dated
as of November 18, 1996 (filed as Exhibit 10.8.2 to the Company's Form
10-K filed October 16, 1997).
10.6* The Company's Amended and Restated 1996 Long-Term Incentive Plan (filed
as Exhibit 10.9 to the Company's Form 10-K filed October 16, 1997).
10.7* Form of Option Agreement for Amended and Restated 1996 Long-Term
Incentive Plan (filed as Exhibit 10.10 to the Company's Form 10-K filed
October 16, 1997).
10.8* The Company's Amended and Restated 1996 Non-Employee Directors' Stock
Option Plan (filed as Exhibit 10.11 to the Company's Form 10-K filed
October 16, 1997).
10.9* Form of Option Agreement for the Amended and Restated 1996 Non-Employee
Directors' Stock Option Plan (filed as Exhibit 10.12 to the Company's
Form 10-K filed October 16, 1997).
10.10* 2290 Remote Access Gateway ("Hawk") Technology Transfer Agreement dated
as of May 2, 1997 between the Company and Paradyne Corporation (filed
as Exhibit 10.13 to the Company's Form 10-K filed October 16, 1997).
10.11* Stock Purchase Agreement dated as of May 2, 1997 between the Company
and Paradyne Corporation, and First Amendment thereto dated September,
1997 (filed as Exhibit 10.14 to the Company's Form 10-K filed October
16, 1997).
10.12* Employment Agreement dated as of November 18, 1996 between the Company
and Ronald Howard (filed as Exhibit 10.15 to the Company's Form 10-K
filed October 16, 1997).
10.13* Manufacturing Agreement dated as of March 1, 1997 between the Company
and Hibbing Electronics Corporation (filed as Exhibit 10.16 to the
Company's Form 10-K filed October 16, 1997).
10.14* Form of Employment Agreement between the Company and Ronald Howard
(filed as Exhibit 10.14 to the Company's registration statement on Form
S-4, as amended, (Commission File Number 333-37993)).
10.15* Form of Employment Agreement between the Company and Dennis Hayes
(filed as
12
<PAGE> 13
Exhibit 10.15 to the Company's registration statement on Form S-4, as
amended, (Commission File Number 333-37993)).
10.16* Employment Agreement between the Company and P.K. Chan dated October 7,
1996, as amended (filed as Exhibit 10.16 to the Company's Form 10-K for
the year ended January 3, 1998).
10.17* Employment Agreement between the Company and Keith Mintzer dated
December 20, 1996 (filed as Exhibit 10.17 to the Company's Form 10-K
for the year ended January 3, 1998).
10.18* Employment Agreement between the Company and James A. Jones dated
October 31, 1997 (filed as Exhibit 10.18 to the Company's Form 10-K for
the year ended January 3, 1998).
10.19* Agreement between the Company and EMI Holding Corp., dated November 13,
1996, as amended on January 6, 1997, February 26, 1997 and April 17,
1997 (filed as Exhibit 10.17 to the Company's Form 10-K filed October
16, 1997).
10.20* Hayes Stock Option Plan (filed as Exhibit 10.17 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.21* First Amendment to Hayes Stock Option Plan (filed as Exhibit 10.18 to
the Company's registration statement on Form S-4, as amended
(Commission File Number 333-37993)).
10.22* Declaration of Amendment to Hayes Stock Option Plan (filed as Exhibit
10.22 to the Company's Form 10-K for the year ended January 3, 1998).
10.23* Forms of Hayes Stock Option Agreements, as amended (filed as Exhibit
10.19 to the Company's registration statement on Form S-4, as amended
(Commission File Number 333-37993)).
10.24* Loan and Security Agreement between the Company and Foothill Capital
Corp. dated October 2, 1997 (filed as Exhibit 10.20 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.25* Shareholders' Agreement dated July 29, 1997, by and among Dennis C.
Hayes, Ronald A. Howard, Access Beyond, Inc. and Hayes Microcomputer
Products, Inc. (filed as Exhibit 10.25 to the Company's Form 10-K for
the year ended January 3, 1998).
10.26* Warrant Plan dated April 11, 1996 (filed as Exhibit 10.37 to the
Company's Form 10-K for the year ended January 3, 1998).
10.27* Warrant dated April 16, 1996 for Chiang Lam (filed as Exhibit 10.38 to
the Company's Form 10-K for the year ended January 3, 1998).
10.28* Warrant dated April 16, 1996 for Mina Hayes (filed as Exhibit 10.39 to
the Company's Form 10-K for the year ended January 3, 1998).
10.29* Lease Agreement dated July 27, 1990, between Hayes Microcomputer
Products, Inc. and Peachtree Crossings Business Park Associates
regarding property located at 5923 Peachtree Industrial Boulevard,
Norcross, Georgia 30092, as amended (filed as Exhibit 10.40 to the
Company's Form 10-K for the year ended January 3, 1998).
10.30* Lease Agreement dated July 27, 1990, between Hayes Microcomputer
Products, Inc. and Peachtree Crossings Business Park Associates
regarding property located at 5953 Peachtree Industrial Boulevard,
Norcross, Georgia 30092, as amended (filed as Exhibit 10.41 to the
Company's Form 10-K for the year ended January 3, 1998).
10.31* Lease Agreement dated July 27, 1990, between Hayes Microcomputer
Products, Inc. and Peachtree Crossings Business Park Associates
regarding property located at
13
<PAGE> 14
5804 Peachtree Corners East, Norcross, Georgia 30092, as amended (filed
as Exhibit 10.42 to the Company's Form 10-K for the year ended January
3, 1998).
10.32* Lease Agreement dated August 13, 1993, between Hayes Microcomputer
Products, Inc. and Peachtree Crossings Business Park Associates
regarding property located at 5854 Peachtree Corners East, Norcross,
Georgia 30092, as amended (filed as Exhibit 10.43 to the Company's Form
10-K for the year ended January 3, 1998).
10.33* Form of Distribution Agreement between the Company and Penril DataComm
Networks, Inc. (filed as Exhibit 2.1 to the Company's registration
statement on Form S-1, as amended (Commission File Number 333-10741).
10.34* Plan and Agreement of Merger dated as of June 16, 1996, as amended
August 5, 1996, among Penril, Bay Networks, Inc. ("Bay") and Beta
Acquisition Corp. (filed as Exhibit 2.2 to the Company's registration
statement on Form S-1, as amended (Commission File Number 333-10741).
10.35* Agreement and Plan of Reorganization between the Company and Hayes
Microcomputer Products, Inc. dated July 29, 1997 (filed as Exhibit 10.1
to the Company's Form 8-K filed August 7, 1997).
10.36* First Amendment to the Agreement and Plan of Reorganization, dated as
of November 7, 1997 (filed as Exhibit 2.3.2 to the Company's
registration statement on Form S-4 (Commission File Number 333-37993)).
10.37* Second Amendment to the Agreement and Plan of Reorganization, dated as
of November 21, 1997 (filed as Exhibit 2.3.3 to the Company's
registration statement on Form S-4 (Commission File Number 333-37993)).
10.38* Voting Agreement dated July 29, 1997 between the Company and Chestnut
Capital Limited Partnership (filed as Exhibit 4.1.1 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.39* Voting Agreement dated July 29, 1997 between the Company and Rinzai
Limited (filed as Exhibit 4.1.2 to the Company's registration statement
on Form S-4, as amended (Commission File Number 333-37993)).
10.40* Voting Agreement dated July 29, 1997 between the Company and Vulcan
Ventures Incorporated (filed as Exhibit 4.1.3 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.41* Affiliate Agreement dated July 29, 1997 between the Company and Kaifa
Technology (H.K.) Limited (filed as Exhibit 4.2.1 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.42* Affiliate Agreement dated July 29, 1997 between the Company and Rinzai
Limited (filed as Exhibit 4.2.2 to the Company's registration statement
on Form S-4, as amended (Commission File Number 333-37993)).
10.43* Affiliate Agreement dated July 29, 1997 between the Company and
Chestnut Limited Partnership (filed as Exhibit 4.2.3 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.44* Affiliate Agreement dated July 29, 1997 between the Company and S. P.
Quek Investments Pte Ltd. (filed as Exhibit 4.2.4 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.45* Affiliate Agreement dated July 29, 1997 between the Company and Dennis
Hayes (filed as Exhibit 4.2.5 to the Company's registration statement
on Form S-4, as amended (Commission File Number 333-37993)).
10.46* Market Standoff Agreement dated July 29, 1997 between the Company and
Kaifa
14
<PAGE> 15
Technology (H.K.) Limited (filed as Exhibit 4.3.1 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.47* Market Standoff Agreement dated July 29, 1997 between the Company and
Rinzai Limited (filed as Exhibit 4.3.2 to the Company's registration
statement on Form S-4, as amended (Commission File Number 333-37993)).
10.48* Market Standoff Agreement dated July 29, 1997 between the Company and
S.P. Quek Investments Pte Ltd. (filed as Exhibit 4.3.3 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.49* Market Standoff Agreement dated July 29, 1997 between the Company and
Rolling Profits Holdings Limited (filed as Exhibit 4.3.4 to the
Company's registration statement on Form S-4, as amended (Commission
File Number 333-37993)).
10.50* Market Standoff Agreement dated July 29, 1997 between the Company and
Saliendra Pte Ltd. (filed as Exhibit 4.3.5 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.51* Market Standoff Agreement dated July 29, 1997 between the Company and
Lao Hotel (H.K.) Limited (filed as Exhibit 4.3.6 to the Company's
registration statement on Form S-4, as amended (Commission File Number
333-37993)).
10.52* Market Standoff Agreement dated July 29, 1997 between the Company and
Dennis Hayes (filed as Exhibit 4.3.7 to the Company's registration
statement on Form S-4, as amended (Commission File Number 333-37993)).
10.53* Preferred Stock Investment Agreement dated as of November 10, 1997
between the Company and certain investors (filed as Exhibit 4.1 to the
Company's Form 8-K filed November 17, 1997).
10.54* Registration Rights Agreement dated as of November 10, 1997 between the
Company and certain investors (filed as Exhibit 4.2 to the Company's
Form 8-K filed November 17, 1997).
10.55* Second Amendment to Loan and Security Agreement between the Company and
CIT dated October 15, 1996 (filed as Exhibit 10.69 to the Company's
Form 10-K for the year ended January 3, 1998).
10.56* Third Amendment to Loan and Security Agreement between the Company and
CIT dated January 1, 1997 (filed as Exhibit 10.70 to the Company's Form
10-K for the year ended January 3, 1998).
10.57* Fourth Amendment to Loan and Security Agreement between the Company and
CIT dated December 29, 1997 (filed as Exhibit 10.71 to the Company's
Form 10-K for the year ended January 3, 1998).
10.58* Guaranty of Hayes Corporation dated January 2, 1998 (filed as Exhibit
10.72 to the Company's Form 10-K for the year ended January 3, 1998).
10.59* Security Agreement of Hayes Corporation dated January 2, 1998 (filed as
Exhibit 10.73 to the Company's Form 10-K for the year ended January 3,
1998).
10.60* Agreement and Plan of Merger between Hayes Microcomputer Products, Inc.
and Cardinal Technologies, Inc., Vulcan Ventures Incorporated and Hayes
Merger Sub., Inc. dated April 11, 1997 (filed as Exhibit 10.74 to the
Company's Form 10-K for the year ended January 3, 1998).
10.61* Preferred Stock Purchase Agreement dated April 11, 1997 between the
Hayes Microcomputer Products, Inc. and Vulcan Ventures Incorporated
(filed as Exhibit 10.75 to the Company's Form 10-K for the year ended
January 3, 1998).
15
<PAGE> 16
10.62* Loan and Security Agreement dated February 20, 1998 by and between
NationsCredit Commercial Corporation and the Company (filed as Exhibit
99.1 to the Company's Form 8-K dated February 20, 1998).
10.63* Corporate Guaranty dated February 20, 1998 by and between NationsCredit
Commercial Corporation and the Company (filed as Exhibit 99.2 to the
Company's Form 8-K dated February 20, 1998).
10.64* Patent, Trademark and License Mortgage dated February 20, 1998 by and
between NationsCredit Commercial Corporation and the Company (filed as
Exhibit 99.3 to the Company's Form 8-K dated February 20, 1998).
10.65* Loan and Security Agreement dated February 20, 1998 by and between
NationsCredit Commercial Corporation and Hayes Microcomputer Products,
Inc. (filed as Exhibit 99.4 to the Company's Form 8-K dated February
20, 1998).
10.66* Corporate Guaranty dated February 20, 1998 by and between NationsCredit
Commercial Corporation and Hayes Microcomputer Products, Inc. (filed as
Exhibit 99.5 to the Company's Form 8-K dated February 20, 1998).
10.67* Patent, Trademark and License Mortgage dated February 20, 1998 by and
between NationsCredit Commercial Corporation and Hayes Microcomputer
Products, Inc. (filed as Exhibit 99.6 to the Company's Form 8-K dated
February 20, 1998).
10.68 1998 Stock Incentive Plan of Hayes Corporation and Form of Option
Agreements.
10.69 Hayes Corporation Employee Stock Purchase Plan.
27 Financial Data Schedule (for Sec use only).
- -------------------
*Incorporated by reference.
Reports on Form 8-K
The Company filed four reports on Form 8-K during the fiscal quarter
covered by this report, as follows:
(i) Report on Form 8-K filed on January 9, 1998, reporting under items 2
and 7 the Company had completed the Merger and pursuant thereto, Hayes
Microcomputer became a subsidiary of the Company and the Company
changed its name to Hayes Corporation.
(ii) Report on Form 8-K filed on January 23, 1998, reporting under item 5
the Board of Directors authorization of a one-for-three reverse split
of its common stock, subject to stockholder approval.
(iii) Report on Form 8-K filed on January 23, 1998, reporting under item 4
the recommendation and approval of the Company's Audit Committee to
retain Coopers & Lybrand LLP and to dismiss Deloitte & Touche LLP
effective January 19, 1998, as the certifying accountant for the
Company's consolidated financial statements.
(iv) Report on Form 8-K filed on April 24, 1998, reporting under item 5 the
Company's new Loan and Security Agreements with NationsCredit
Commercial Corporation through its NationsCredit Commercial Funding
Division.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hayes Corporation
(Registrant)
DATE: May 15, 1998 BY: /s/ Ronald A. Howard
----------------------------------
Ronald A. Howard
Chief Executive Officer and
Vice Chairman of the Board of Directors
(Principal Executive Officer)
DATE: May 15, 1998 BY: /s/ James A. Jones
----------------------------------
James A. Jones
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
17
<PAGE> 1
EXHIBIT 10.68
1998 STOCK INCENTIVE PLAN
OF
HAYES CORPORATION
<PAGE> 2
1998 STOCK INCENTIVE PLAN
OF
HAYES CORPORATION
1. PURPOSE
The purpose of the 1998 Stock Incentive Plan of Hayes Corporation (the
"Plan") is to encourage and enable employees, and independent contractors of
Hayes Corporation (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
stockholders, thereby further stimulating their efforts to enhance the
efficiency, soundness, profitability, growth and stockholder value of the
Corporation. This purpose will be carried out through the granting of benefits
(collectively referred to herein as "Awards") to employees and independent
contractors, including 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 Compensation Committee of the
Board of Directors (the "Committee"); provided, however, that the Board of
Directors of the Corporation may, in its sole discretion, assume administration
of the Plan in whole or in part. (For the purposes herein, references to the
Committee shall also include the Board of Directors if it is acting in its
administrative capacity.) Unless the Board shall determine otherwise, 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
<PAGE> 3
administering the Plan. The Committee shall also 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 Award
granted to any recipient. In addition, the Committee shall have the authority
and discretion to establish terms and conditions of Awards as the Committee
determines to be necessary or appropriate to conform to the applicable
requirements or practices of jurisdictions outside of the United States.
3. EFFECTIVE DATE
The effective date of the Plan shall be May 8, 1998 (the "Effective
Date"). Awards may be granted under the Plan on and after the effective date,
but no Awards will be granted after May 7, 2008.
4. SHARES OF STOCK SUBJECT TO THE PLAN; AWARD LIMITATIONS
(a) The number of shares of Common Stock that may be issued pursuant to
Awards shall be 2,000,000 shares of authorized but unissued shares or treasury
shares of the Corporation, subject to adjustments and increases as provided in
this Section 4.
(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 of the Corporation or its predecessors) 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 limitation
upon Awards shall apply:
In no event shall an employee be granted Awards under the Plan
for more than 500,000 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.
-2-
<PAGE> 4
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, or (ii) 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 power of all
classes of stock of the Corporation. Notwithstanding the foregoing, an
individual who owns more than ten percent of the total combined voting power of
the Corporation may be granted an Incentive Option if the option price (as
determined pursuant to Section 6(b) herein, is at least 110% of the Fair Market
Value of the Common Stock (as defined in Section 6(b) herein), and the option
period (as defined in Section 6(c) herein) 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, 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.
(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 (i) 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 and (ii) in no
event shall the option price per share of any Option be less than the par value
per share of the Common Stock. 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.
-3-
<PAGE> 5
(ii) For the purposes of the Plan, the Fair Market Value of
the shares shall be determined in good faith by the Committee in
accordance with the following provisions: (A) if the shares of Common
Stock are listed for trading on the New York Stock Exchange or the
American Stock Exchange, the Fair Market Value shall be the closing
sales price of the shares on the New York Stock Exchange or the
American Stock Exchange (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 National Market or the Nasdaq SmallCap Market of the Nasdaq
Stock Market, the 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 on the date immediately preceding the date the
Option is granted for which such information is available; or (B) if
the shares of Common Stock are not listed or reported in any of the
foregoing, then the 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 term of an Option (the "option period") shall be
determined by the Committee at the time the Option is granted. With
respect to Incentive Options, such 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. The period during which an Option may be exercised
shall be determined by the Committee at the time the Option is granted.
(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).
-4-
<PAGE> 6
(iii) Notwithstanding Section 6(c)(i) herein, 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) Unless an individual option agreement provides
otherwise, 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) Unless an individual option agreement provides
otherwise, 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
-5-
<PAGE> 7
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 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) Unless an individual option agreement provides
otherwise, 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 (X) dishonesty; (Y) refusal to perform
his duties for the Corporation; or (Z) engaging in conduct
that could be materially damaging to the Corporation without a
reasonable good faith belief that such conduct was in the best
interest of the Corporation. 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) Notwithstanding Section 6(c)(i), herein, unless the
individual option agreement provides otherwise, an Option granted to a
Participant who was an independent contractor 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.
-6-
<PAGE> 8
(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
Options shall not be transferable other than by will or the
laws of intestate succession. The designation of a beneficiary does not
constitute a transfer. An Option shall be exercisable during the
Participant's lifetime only by him or by his guardian or legal
representative.
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
-7-
<PAGE> 9
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 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: Unless an individual agreement provides
otherwise, 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.
(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 Sections 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.
-8-
<PAGE> 10
(f) Limitations: The applicable SAR 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 or the
laws of intestate succession. 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 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 stockholders. 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 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
-9-
<PAGE> 11
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), 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
-10-
<PAGE> 12
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.
(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 or the laws of intestate succession. 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 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 in accordance with election
procedures established by the Committee.
-11-
<PAGE> 13
10. PERFORMANCE-BASED COMPENSATION
To the extent that Section 162(m) of the Code is applicable, the
Committee shall have discretion to determine the extent, if any, 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.
11. SECTION 16(B) COMPLIANCE
It is the general intent of the Corporation that transactions under the
Plan which are subject to Section 16 of the Exchange Act shall comply with Rule
16b-3 under the Exchange Act. 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.
13. UNFUNDED PLAN; RETIREMENT PLANS
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related corporation including, without limitation, any
specific funds, assets or other property which the Corporation or any related
corporation, in their discretion, may set aside in anticipation of a liability
under the Plan. A participant shall have only a contractual right to the Common
Stock or amounts, if any, payable under the Plan, unsecured by any assets of the
Corporation or any related corporation. Nothing contained in the Plan shall
constitute a guarantee that the assets of such corporations shall be sufficient
to pay any benefits to any person.
(b) 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.
-12-
<PAGE> 14
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 (i) 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 (ii)
approval of an amendment by the stockholders of the Corporation shall only be
required in the event such stockholder approval of any such amendment is
required by applicable law, rule or regulation.
-13-
<PAGE> 15
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 of 1933, as amended (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.
Notwithstanding any other Plan provision to the contrary, the Corporation shall
not be obligated to issue or deliver shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan, or take any other
action, unless such delivery, distribution or action is in compliance with all
applicable laws, rules and regulations (including but not limited to the
requirements of the Securities Act). 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 Delaware.
18. STOCKHOLDER APPROVAL
The Plan is subject to approval by the stockholders 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 stockholder approval shall be conditioned
upon and shall be effective only upon approval of the Plan by such stockholders
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
-14-
<PAGE> 16
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, unless an individual agreement provides
otherwise, a "Change of Control" shall be deemed to have occurred on the
earliest of the following dates:
(i) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over, thirty
percent (30%) or more of the outstanding Common Stock of the
Corporation;
(ii) The date the stockholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with
or into another corporation, in which the Corporation is not the
continuing or surviving corporation or pursuant to which any shares of
Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a
merger or consolidation of the Corporation in which holders of Common
Stock immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of the
Corporation; or
(iii) The date there shall have been a change in a majority of
the Board of Directors of the Corporation within a 12-month period
unless the nomination for election by the Corporation's stockholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning of
the 12-month period.
(For purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such
term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, other than the Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the Corporation or
any subsidiary thereof, and the term "beneficial owner" shall have the
meaning given the term in Rule 13d-3 under the Exchange Act.)
-15-
<PAGE> 17
IN WITNESS WHEREOF, this 1998 Stock Incentive Plan of Hayes
Corporation, is, by the authority of the Board of Directors of the Corporation,
executed in behalf of the Corporation, the 8th day of May, 1998.
HAYES CORPORATION
/s/ Dennis C. Hayes
-------------------------
Dennis C. Hayes, Chairman
ATTEST:
/s/ James A. Jones
- -------------------------
James A. Jones, Secretary
[Corporate Seal]
-16-
<PAGE> 18
1998 STOCK INCENTIVE PLAN
OF HAYES CORPORATION
(EMPLOYEE OPTION AGREEMENT)
THIS AGREEMENT (the "Agreement"), made the _____ day of ____________,
____, between HAYES CORPORATION, a Delaware corporation (the "Corporation"), and
______________________, an employee of the Corporation or a related corporation
(the "Optionee");
RECITALS:
In furtherance of the purposes of the 1998 Stock Incentive Plan of
Hayes Corporation, as it may be hereafter amended (the "Plan"), the Corporation
and the Optionee hereby agree as follows:
1. The rights and duties of the Corporation and the Optionee under this
Agreement shall in all respects be subject to and governed by the provisions of
the Plan, the terms of which are incorporated herein by reference.
2. The Corporation hereby grants to the Optionee pursuant to the Plan,
as a matter of separate inducement and agreement in connection with his
employment or service to the Corporation, and not in lieu of any salary or other
compensation for his services, the right and Option (the "Option") to purchase
all or any part of an aggregate of _______________ (_________) shares (the
"shares") of the Common Stock of the Corporation, at an option price of
_____________________________ ($__________) per share. The Option to purchase
_____________ (_____) of the shares shall be designated as an Incentive Option.
The Option to purchase ________________ (_____) of the shares shall be
designated as a Nonqualified Option. To the extent that any Option is designated
as an Incentive Option and such Option does not qualify as an Incentive Option,
it shall be treated as a Nonqualified Option. Except as otherwise provided in
the Plan, the Option will expire if not exercised in full before ______________,
______________.
3. The Option shall become exercisable on the date or dates set forth
on Schedule A attached hereto. To the extent that an Option which is exercisable
is not exercised, such Option shall accumulate and be exercisable by the
Optionee in whole or in part at any time prior to expiration of the Option. Upon
the exercise of an Option in whole or in part, the Optionee shall pay the option
price to the Corporation in accordance with the provisions of the Plan, and the
Corporation shall as soon thereafter as practicable deliver to the Optionee a
certificate or certificates for the shares purchased.
4. Nothing contained in this Agreement or the Plan shall require the
Corporation or a related corporation to continue to employ the Optionee for any
particular period of time, nor shall it require the Optionee to remain in the
employ of the Corporation or such related corporation for any particular period
of time. Except as otherwise expressly provided in the Plan, all rights of the
Optionee under the Plan with respect to the unexercised portion of his Option
shall terminate upon termination of the employment of the Optionee with the
Corporation or a related corporation.
<PAGE> 19
5. Except as may be otherwise provided in the Plan, this Option shall
not be transferable other than by will or the laws of intestate succession. This
Option shall be exercisable during the Optionee's lifetime only by the Optionee.
6. This Agreement may be modified, amended or terminated only by the
written consent of the parties hereto.
7. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective executors, administrators,
next-of-kin, successors and assigns.
8. Except as otherwise provided in the Plan or herein, this Agreement
shall be construed and enforced according to the laws of the State of Delaware.
IN WITNESS WHEREOF, this Agreement has been executed in behalf of the
Corporation and by the Optionee on the day and year first above written.
HAYES CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Attest:
Secretary
[Corporate Seal]
OPTIONEE
--------------------------------------(SEAL)
Name:
---------------------------------------
-2-
<PAGE> 20
1998 STOCK INCENTIVE PLAN
OF HAYES CORPORATION
(EMPLOYEE OPTION AGREEMENT)
SCHEDULE A
Date Option granted: __________________, ______.
Date Option expires: __________________, ______.
Number of shares subject to Option: _______ shares.
Option price (per share): $________.
<TABLE>
<CAPTION>
Date Installment Number of Shares Incentive or
First Exercisable in Installment Nonqualified Stock Option
- ----------------- ---------------- -------------------------
<S> <C> <C>
</TABLE>
<PAGE> 21
1998 STOCK INCENTIVE PLAN
OF HAYES CORPORATION
(NON-EMPLOYEE DIRECTOR/INDEPENDENT CONTRACTOR AGREEMENT)
THIS AGREEMENT (the "Agreement"), made the ______ day of ____________,
____, between HAYES CORPORATION, a Delaware corporation (the "Corporation"), and
______________________ (the "Optionee");
RECITALS:
In furtherance of the purposes of the 1998 Stock Incentive Plan of
Hayes Corporation, as it may be hereafter amended (the "Plan"), the Corporation
and the Optionee hereby agree as follows:
1. The rights and duties of the Corporation and the Optionee under this
Agreement shall in all respects be subject to and governed by the provisions of
the Plan, the terms of which are incorporated herein by reference.
2. The Corporation hereby grants to the Optionee pursuant to the Plan,
as a matter of separate inducement and agreement in connection with his services
to the Corporation or a related corporation, and not in lieu of any salary or
other compensation for his services, the right and Option (the "Option") to
purchase all or any part of an aggregate of _______________ (_________) shares
(the "shares") of the Common Stock of the Corporation, at an option price of
__________________________ ($__________) per share. The Option shall be
designated as a Nonqualified Option. Except as otherwise provided in the Plan,
the Option will expire if not exercised in full before ____________, ________.
3. The Option shall become exercisable on the date or dates shown on
Schedule A. To the extent that an Option which is exercisable is not exercised,
such Option shall accumulate and be exercisable by the Optionee in whole or in
part at any time prior to expiration of the Option. Upon the exercise of an
Option in whole or in part, the Optionee shall pay the option price to the
Corporation in accordance with the provisions of the Plan, and the Corporation
shall as soon thereafter as practicable deliver to the Optionee a certificate or
certificates for the shares purchased.
4. Nothing contained in this Agreement or the Plan shall require the
Corporation or a related corporation to continue to require the services of the
Optionee for any particular period of time, nor shall it require the Optionee to
remain in service to the Corporation or such related corporation for any
particular period of time. Except as otherwise expressly provided in the Plan,
all rights of the Optionee under the Plan with respect to the unexercised
portion of his Option shall terminate upon termination of the service of the
Optionee with the Corporation or a related corporation.
5. Except as may be otherwise provided by the Plan, this Option shall
not be transferable other than by will or the laws of intestate succession. This
Option shall be exercisable during the Optionee's lifetime only by the Optionee.
<PAGE> 22
6. This Agreement may be modified, amended or terminated only by the
written consent of the parties hereto.
7. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective executors, administrators,
next-of-kin, successors and assigns.
8. Except as otherwise provided herein or in the Plan, this Agreement
shall be construed and enforced according to the laws of the State of Delaware.
IN WITNESS WHEREOF, this Agreement has been executed in behalf of the
Corporation and by the Optionee on the day and year first above written.
HAYES CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Attest:
Secretary
[Corporate Seal]
OPTIONEE
(SEAL)
--------------------------------------
Name:
---------------------------------------
-2-
<PAGE> 23
1998 STOCK INCENTIVE PLAN
OF HAYES CORPORATION
(NON-EMPLOYEE DIRECTOR/INDEPENDENT CONTRACTOR AGREEMENT)
SCHEDULE A
Date Option granted: __________________, _____.
Date Option expires: __________________, _____.
Number of shares subject to Option: _______ shares.
Option price (per share): $________.
<TABLE>
<CAPTION>
Date Installment Number of Shares
First Exercisable in Installment
----------------- ----------------
<S> <C>
</TABLE>
<PAGE> 1
EXHIBIT 10.69
HAYES CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The purpose of the Hayes Corporation Employee Stock Purchase
Plan (the "Plan") is to give eligible employees of Hayes Corporation, a Delaware
corporation (the "Corporation"), and its Subsidiaries an opportunity to acquire
shares of the common stock of the Corporation (the "Common Stock") and to
continue to promote the Corporation's best interests and enhance its long-term
performance. This purpose will be carried through the granting of options
("options") to purchase shares of the Corporation's Common Stock through payroll
deductions or other means permitted under the Plan. The Plan is intended to
comply with the requirements of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), applicable to employee stock purchase plans. The
provisions of the Plan shall be construed so as to comply with the requirements
of Section 423 of the Code.
2. CERTAIN DEFINITIONS
In addition to terms defined elsewhere in the Plan, the
following words and phrases shall have the meanings given below unless a
different meaning is required by the context:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Compensation Committee of the Board,
which has authority to administer the Plan pursuant to Section 4
herein.
(d) "Common Stock" means shares of the common stock of the
Corporation.
(e) "Corporation" means Hayes Corporation, a Delaware
corporation.
(f) "Eligible Employee" means any employee of the Corporation
or a Subsidiary except for (i) any employee whose customary employment
is 20 hours or less per week, or (ii) any employee whose customary
employment is for not more than five months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave
of absence approved by the Corporation; provided that, where the period
of leave exceeds 90 days and the individual's right to reemployment is
not guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such
leave.
<PAGE> 2
(g) "Fair Market Value" of the Common Stock as of the
applicable Offer Date 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, the Fair Market Value shall be the closing sales
price of the shares on the New York Stock Exchange or the
American Stock Exchange (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 National Market or the
Nasdaq SmallCap Market of the Nasdaq Stock Market but are not
listed for trading on the New York Stock Exchange or the
American Stock Exchange, the 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 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 any other manner consistent
with the Code and accompanying regulations.
Notwithstanding any provision of the Plan to the contrary, no
determination made with respect to the Fair Market Value of Common
Stock subject to an option shall be inconsistent with Section 423 of
the Code or regulations thereunder.
(h) "Offer Date" means the date of grant of an option pursuant
to the Plan. The Offer Date shall be the first date of each Purchase
Period, commencing with the Purchase Period that commences on July 5,
1998.
(i) "Option" means an option granted hereunder which will
entitle a participant to purchase shares of Common Stock in accordance
with the terms of the Plan.
(j) "Option price" means the price per share of Common Stock
subject to an option, as determined in accordance with Section 8(b).
(k) "Participant" means an Eligible Employee who is a
participant in the Plan.
(l) "Plan" means the Hayes Corporation Employee Stock Purchase
Plan, as it may be hereafter amended.
2
<PAGE> 3
(m) "Purchase Date" means the date of exercise of an option
granted under the Plan. The Purchase Date shall be the last day of each
Purchase Period, commencing with the Purchase Period that terminates on
January 3, 1999.
(n) "Purchase Period" means each quarterly period during which
an offering to purchase Common Stock is made to Eligible Employees
pursuant to the Plan, coinciding with each of the fiscal quarters of
Hayes' fiscal year. The first date of each Purchase Period in a fiscal
year shall be the first date of the corresponding fiscal quarter, and
the last date of each Purchase Period in a fiscal year shall be the
last date of the corresponding fiscal year. Notwithstanding the
foregoing, the first Purchase Period after the effective date of the
Plan shall begin on July 5, 1998 and end on January 2, 1999. The
Committee shall have the power to change the duration of Purchase
Periods (including the commencement date thereof) with respect to
future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of
the first Purchase Period to be affected thereafter.
(o) "Subsidiary" means any present or future corporation which
(i) would be a "subsidiary corporation" of the Corporation as that term
is defined in Section 424 of the Code and (ii) is at any time
designated as a corporation whose employees may participate in the
Plan.
3. EFFECTIVE DATE
The Effective Date of the Plan shall be May 8, 1998. The first
Purchase Period during which offers to purchase Common Stock will be made shall
commence on July 5, 1998. The Plan shall have a term of 10 years unless sooner
terminated in accordance with Section 16 herein.
4. ADMINISTRATION
(a) The Plan shall be administered by the Board or, upon its
delegation, by the Committee. References to the Committee shall include
the Board if it is acting in its administrative capacity with respect
to the Plan.
(b) Any action of the Committee may be taken by a written
instrument signed by all of the members of the Committee and any 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, the Committee shall have
full and final authority, in its discretion, to take any action with
respect to the Plan, including, without limitation, the following: (i)
to establish, amend and rescind rules and regulations for the
administration of the Plan; (ii) to prescribe the form(s) of any
agreements or other written instruments used in connection with the
Plan; (iii) to determine the terms and provisions of the options
granted hereunder; and (iv) to construe and interpret the Plan, the
options, the rules and regulations, and the agreements or other written
instruments, and to make all other
3
<PAGE> 4
determinations necessary or advisable for the administration of the
Plan. The determinations of the Committee on all matters regarding the
Plan shall be conclusive. The Committee may appoint one or more agents
to assist in the administration of the Plan.
5. SHARES SUBJECT TO PLAN
The aggregate number of shares of Common Stock which may be
purchased under the Plan shall not exceed 1,000,000 shares, subject to
adjustment pursuant to Section 13 herein. Shares of Common Stock granted
pursuant to the Plan shall be authorized but unissued shares, treasury shares or
shares purchased on the open market. The Corporation hereby reserves sufficient
authorized shares of Common Stock to provide for the exercise of options granted
hereunder. In the event that any option granted under the Plan expires
unexercised or is terminated, surrendered or canceled without being exercised,
in whole or in part, for any reason, the number of shares of Common Stock
subject to such option shall again be available for grant as an option and shall
not reduce the aggregate number of shares of Common Stock available for the
grant of options as set forth herein. If, on a given Purchase Date, the number
of shares with respect to which options are to be exercised exceeds the number
of shares then available under the Plan, the Corporation shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable.
6. ELIGIBILITY
(a) Initial Eligibility. Any Eligible Employee who shall have
completed 90 days' employment and shall be employed by the Corporation
on any given the Offer Date for a Purchase Period shall be eligible to
be a participant during such Purchase Period.
(b) Certain Limitations. Any provisions of the Plan to the
contrary notwithstanding:
(i) No Eligible Employee shall be granted an option
under the Plan to the extent that, immediately after the
option was granted, the individual would own stock or hold
outstanding options to purchase stock (or both) possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Corporation or of any parent or
subsidiary of the Corporation. For purposes of this Section
6(b)(i), stock ownership of an individual shall be determined
under the rules of Section 424(d) of the Code, and stock which
the employee may purchase under outstanding options shall be
treated as stock owned by the employee.
(ii) No Eligible Employee shall be granted an option
under the Plan to the extent that his rights to purchase stock
under all employee stock purchase plans (as defined in Section
423 of the Code) of the Corporation and any parent or
Subsidiary of the Corporation would accrue at a rate which
exceeds $25,000 of fair market value of such stock (determined
at the time of the grant of such option) for each calendar
4
<PAGE> 5
year in which such option is outstanding at any time. Any
option granted under the Plan shall be deemed to be modified
to the extent necessary to satisfy this Section 6(b)(ii).
7. PARTICIPATION; PAYROLL DEDUCTIONS
(a) Commencement of Participation. An Eligible Employee shall
become a participant by completing a subscription agreement authorizing
payroll deductions on the form provided by the Corporation and filing
it with the Corporation prior to the Offer Date for the applicable
Purchase Period. Following the filing of a valid subscription
agreement, payroll deductions for a participant shall commence on the
first payroll period which occurs on or after the Offer Date for the
applicable Purchase Period and shall continue for successive Purchase
Periods during which the participant is eligible to participate in the
Plan, unless modified as provided in Section 7(d), or withdrawn as
provided in Section 10 herein.
(b) Amount of Payroll Deduction; Determination of
Compensation. At the time a participant files his subscription
agreement authorizing payroll deductions, he shall elect to have
payroll deductions made on each payday that he is a participant during
a Purchase Period at a rate of not less than 1% nor more than 15% of
his compensation. For the purposes herein, a participant's
"compensation" during any Purchase Period means his base salary or
regular rate of compensation (excluding commissions, bonuses, incentive
compensation, overtime, employee benefits and similar elements of
compensation) determined as of the first day of each Purchase Period.
In the case of an hourly employee, an Eligible Employee's compensation
during a pay period shall be determined by multiplying such employee's
hourly rate of pay in effect on the date of the payroll deduction by
the number of hours of work for such employee during such period. Such
compensation rates shall be determined by the Committee in a
nondiscriminatory manner consistent with the provision of Section 423
of the Code and the regulations thereunder.
(c) Participant's Account. All payroll deductions made for a
participant shall be credited to his account under the Plan and shall
be withheld in whole percentages only.
(d) Changes in Payroll Deductions. A participant may
discontinue his participation in the Plan as provided in Section 10
herein, or may increase or decrease the rate of his payroll deductions
during a Purchase Period by completing and filing with the Corporation
a new subscription agreement authorizing a change in payroll deduction
rate. The Committee may, in its discretion, limit the number of
participation rate changes during a Purchase Period. The change in rate
shall be effective with the first full payroll period following five
(5) business days after the Corporation's receipt of the new
subscription agreement unless the Corporation elects to process a given
change in participation more quickly. A participant's subscription
agreement shall remain in effect for successive Purchase Periods unless
modified or terminated as provided in Sections 7(d) and 10 herein. A
participant may discontinue his participation in the Plan as provided
in Section 10, but no
5
<PAGE> 6
other change may be made during a Purchase Period and, specifically, a
participant may not alter the amount of his payroll deductions for that
Purchase Period.
(e) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 6(b) herein, a
participant's payroll deductions may be decreased to zero percent (0%)
at any time during a Purchase Period. Payroll deductions shall
recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by
the participant pursuant to Section 10 herein.
(f) Participation During Leave of Absence. If a participant
goes on a leave of absence, such participant shall have the right to
elect: (i) to withdraw the balance in his account pursuant to Section
10; (ii) to discontinue contributions to the Plan but remain a
participant in the Plan; or (iii) to remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from
payments by the Corporation to the participant during such leave of
absence and undertaking to make cash payments to the Plan at the end of
each payroll period to the extent that amounts payable by the
Corporation to such participant are insufficient to meet such
participant's authorized payroll deductions.
8. GRANT OF OPTIONS
(a) Number of Option Shares. On the Offer Date of each
Purchase Period, a participant shall be granted an option to purchase
on the Purchase Date of such Purchase Period (at the applicable option
price) such number of shares of Common Stock as is determined by
dividing the amount of the participant's payroll deductions accumulated
on or prior to the Purchase Date and retained in the participant's
account as of the Purchase Date by the applicable option price (as
determined in accordance with Section 8(b) herein); provided that such
purchase shall be subject to the limitations set forth in Sections 6(b)
herein. Exercise of the option shall occur as provided in Section 9
herein, unless the participant has withdrawn pursuant to Section 10
herein or terminated employment pursuant to Section 11 herein.
(b) Option Price. The option price per share of Common Stock
purchased with payroll deductions made during such a Purchase Period
for a participant shall be 85% of the Fair Market Value of a share of
the Common Stock on the Purchase Date for the Purchase Period.
9. EXERCISE OF OPTIONS
(a) Automatic Exercise. Unless a participant gives written
notice of withdrawal to the Corporation as provided in Section 10 or
terminates employment as provided in Section 11, his option for the
purchase of Common Stock shall be exercised automatically on the
Purchase Date applicable to such Purchase Period, and the maximum
number of
6
<PAGE> 7
whole shares of Common Stock subject to the option shall be purchased
for the participant at the applicable option price with the accumulated
payroll deductions in his account at that time.
(b) Termination of Option. An option granted during any
Purchase Period shall expire on the last day of the Purchase Period,
except as otherwise provided in Sections 10 and 11.
(c) Fractional Shares. Fractional shares will not be issued
under the Plan. Any excess payroll deductions in a participant's
account which are not sufficient to purchase a whole share will be
automatically re-invested in a subsequent Purchase Period unless the
participant withdraws his payroll deductions pursuant to Section 10
herein or terminates employment pursuant to Section 11 herein.
(d) Delivery of Stock. Within ten (10) business days after the
Purchase Date of each Purchase Period, the Corporation will deliver to
each participant (or his beneficiary) certificate(s) for the shares of
Common Stock purchased upon exercise of his option.
10. WITHDRAWAL.
A participant may withdraw all but not less than all payroll
deductions and share certificates credited to his account during a Purchase
Period at any time prior to the applicable Purchase Date by giving written
notice to the Corporation in form acceptable to the Corporation. In the event of
such withdrawal, (i) all of the participant's payroll deductions credited to his
account will be paid to him promptly (without interest) after receipt of his
notice of withdrawal, (ii) certificates for shares held in the participant's
account shall be distributed to him, (iii) such participant's option for the
Purchase Period shall be automatically terminated, and (iv) no further payroll
deductions will be made during such Purchase Period. The Corporation may, at its
option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election to withdraw. A participant's
withdrawal during any Purchase Period will not have any effect upon his
eligibility to participate in any succeeding Purchase Period or in any similar
plan which may hereafter be adopted by the Corporation. Notwithstanding the
foregoing, however, if a participant withdraws during a Purchase Period, payroll
deductions shall not resume at the beginning of a succeeding Purchase Period
unless the participant delivers to the Corporation a new subscription agreement
and otherwise complies with the terms of the Plan.
11. TERMINATION OF EMPLOYMENT.
Upon termination of a participant's employment for any reason
(including death), or in the event that a participant ceases to be an Eligible
Employee, he shall be deemed to have withdrawn from the Plan. In such event, all
payroll deductions credited to his account during the Purchase Period (without
interest) but not yet used to exercise an option shall be delivered to him, or,
in the case of his death, to a beneficiary duly designated on a form acceptable
to the Committee
7
<PAGE> 8
pursuant to Section 17 herein. Any unexercised options granted to a participant
during such Purchase Period shall be deemed to have expired on the date of the
participant's termination of employment (unless terminated earlier pursuant to
Sections 9(b) or 10 herein).
12. TRANSFERABILITY
Neither payroll deductions credited to a participant's account
nor any option (or rights attendant to an option) granted pursuant to the Plan
may be transferred, assigned, pledged, or hypothecated (whether by operation of
law or otherwise), except as provided by will or the applicable laws of descent
or distribution. No option shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an option, or levy of attachment or similar process upon the
option not specifically permitted herein, shall be null and void and without
effect, except that the Corporation may treat such act as an election to
withdraw funds during a Purchase Period in accordance with Section 10 hereof.
During a participant's lifetime, his option(s) may be exercised only by him.
13. DILUTION AND OTHER ADJUSTMENTS
(a) General. If there is any change in the outstanding shares
of Common Stock of the Corporation as a result of a merger, consolidation,
reorganization, stock dividend, stock split distributable in shares, or other
change in the capital stock structure of the Corporation, the Committee shall
make such adjustments to options (including but not limited to the option price
and the number of shares of Common Stock covered by each unexercised option), to
the number of shares reserved for issuance under the Plan, and to any provisions
of this Plan as the Committee deems equitable to prevent dilution or enlargement
of options or otherwise advisable to reflect such change.
(b) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Corporation, or the merger of the
Corporation with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted (in either case under terms
substantially similar to the terms of the Plan) by the successor corporation or
a parent or subsidiary of the successor corporation. In the event that the
successor corporation fails to agree to assume or substitute the option, the
Purchase Period then in progress shall be shortened by setting a new Purchase
Date (the "New Purchase Date") and the Purchase Period then in progress shall
end on the New Purchase Date. The New Purchase Date shall be before the date of
the Corporation's proposed sale or merger. The Corporation shall notify each
participant in writing, at least ten (10) business days prior to the New
Purchase Date, that the Purchase Date for the participant's option has been
changed to the New Purchase Date and that the participant's option shall be
exercised automatically on the New Purchase Date, unless prior to such date the
participant has withdrawn from the Purchase Period as provided in Section 10
hereof.
8
<PAGE> 9
14. STOCKHOLDER APPROVAL OF ADOPTION OF PLAN
The Plan is subject to the approval of the Plan by the holders
of a majority of the outstanding shares of Common Stock of the Corporation
within 12 months of the date of adoption of the Plan by the Board. The Plan
shall be null and void and of no effect if the foregoing condition is not
fulfilled.
15. LIMITATIONS ON OPTIONS
Notwithstanding any other provisions of the Plan:
(a) The Corporation intends that options granted and Common
Stock issued under the Plan shall be treated for all purposes as
granted and issued under an employee stock purchase plan within the
meaning of Section 423 of the Code and regulations issued thereunder.
Any provisions required to be included in the Plan under Section 423
and regulations issued thereunder are hereby included as fully as
though set forth in the Plan.
(b) All employees shall have the same rights and privileges
under the Plan, except that the amount of Common Stock which may be
purchased by any employee under options granted pursuant to the Plan
shall bear a uniform relationship to the compensation of employees. All
rules and determinations of the Committee in the administration of the
Plan shall be uniformly and consistently applied to all persons in
similar circumstances.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may at any time and from time to time modify, amend,
suspend or terminate the Plan or any option granted hereunder, except that (i)
stockholder approval shall be required of any amendment to the extent required
under Section 423 of the Code or other applicable law or rule; and (ii) no
amendment may materially and adversely affect any option outstanding at the time
of the amendment without the consent of the holder thereof. The Plan shall
terminate in any event when the maximum number of shares of Common Stock to be
sold under the Plan (as provided in Section 5) has been purchased.
17. DESIGNATION OF BENEFICIARY
The Committee, in its sole discretion, may authorize
participants to designate a person or persons as each such participant's
beneficiary, which beneficiary shall be entitled to the rights of the
participant in the event of the participant's death to which the participant
would otherwise be entitled. The Committee shall have sole discretion to approve
the form or forms of such beneficiary designations, to determine whether such
beneficiary designations will be accepted, and to interpret such beneficiary
designations.
9
<PAGE> 10
18. LEGAL AND OTHER REQUIREMENTS.
The obligations of the Corporation to issue, deliver and
transfer shares of Common Stock subject to the Plan shall be subject to all
applicable laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, as amended, if deemed necessary or appropriate by the Corporation.
Certificates for shares of Common Stock issued hereunder may be legended as the
Corporation shall deem appropriate.
19. INTEREST.
No interest shall accrue on the payroll deductions of a
participant in the Plan.
20. NO OBLIGATION TO EXERCISE OPTIONS.
The granting of an option shall impose no obligation upon a
participant to exercise such option.
21. USE OF FUNDS.
The proceeds received by the Corporation from the sale of
Common Stock pursuant to options will be used for general corporate purposes,
and the Corporation shall not be obligated to segregate such payroll deductions.
22. WITHHOLDING TAXES.
Upon the exercise of any option under the Plan, in whole or in
part, or at the time some or all of the Common Stock is disposed of, a
participant must make adequate provision for the Corporation's federal, state or
other tax withholding obligations, if any, which arise from the exercise of the
option or the disposition of the Common Stock. The Corporation shall have the
right to require the participant to remit to the Corporation, or to withhold
from the participant (or both) compensation in an amount sufficient to satisfy
all federal, state and local withholding tax requirements prior to the delivery
or transfer of any certificate or certificates for shares of Common Stock.
23. RIGHT TO TERMINATE EMPLOYMENT.
Nothing in the Plan or any agreement entered into pursuant to
the Plan shall confer upon an employee the right to continue in the employment
of the Corporation or any Subsidiary or affect any right which the Corporation
or any Subsidiary may have to terminate the employment of such employee.
10
<PAGE> 11
24. RIGHTS AS A SHAREHOLDER.
No participant or other person shall have any right as a
stockholder unless and until certificates for shares of Common Stock are issued
to him.
25. NOTICES.
All notices or other communications by a participant to the
Corporation under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Corporation at the
location, or by the person, designated by the Corporation for the receipt
thereof.
26. APPLICABLE LAW.
All questions pertaining to the validity, construction and
administration of the Plan and options granted hereunder shall be determined in
conformity with the laws of Delaware, to the extent not inconsistent with
Section 423 of the Code and regulations thereunder.
27. ELIMINATION OF FRACTIONAL SHARES.
If under any provision of the Plan which requires a
computation of the number of shares of Common Stock subject to an option, the
number so computed is not a whole number of shares of Common Stock, such number
of shares of Common Stock shall be rounded down to the next whole number.
IN WITNESS WHEREOF, this Hayes Corporation Employee Stock
Purchase Plan has been executed in behalf of the Corporation effective as of the
8th day of May, 1998.
HAYES CORPORATION
/s/ Dennis C. Hayes
-------------------------
Dennis C. Hayes, Chairman
Attest:
/s/ James A. Jones
- -------------------------
James A. Jones, Secretary
[Corporate Seal]
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HAYES CORPORATION FOR THE THREE MONTHS ENDED
APRIL 04, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> APR-04-1998
<CASH> 4,125
<SECURITIES> 0
<RECEIVABLES> 45,041
<ALLOWANCES> 5,999
<INVENTORY> 38,080
<CURRENT-ASSETS> 84,211
<PP&E> 45,715
<DEPRECIATION> 36,666
<TOTAL-ASSETS> 108,855
<CURRENT-LIABILITIES> 70,966
<BONDS> 0
49,899
0
<COMMON> 198
<OTHER-SE> (19,944)
<TOTAL-LIABILITY-AND-EQUITY> 108,855
<SALES> 44,172
<TOTAL-REVENUES> 44,172
<CGS> 33,043
<TOTAL-COSTS> 33,043
<OTHER-EXPENSES> 3,558
<LOSS-PROVISION> 73
<INTEREST-EXPENSE> 459
<INCOME-PRETAX> (3,352)
<INCOME-TAX> 26
<INCOME-CONTINUING> (3,378)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,016)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
